Start digging with a shovel by hand.

How old is the house?

Do you live in an area where heating oil is or was common for home heating?

Are there any small pipes (about 1" diameter) coming up out of the ground nearby, such as on the wall of the building?

Are there any abandoned pipes coming into the basement near the furnace?

I don't think it is a septic tank, unless the garage was built later. No one would intentionally cover an active septic tank because you have to clean them out regularly.

Not sure why a house would need a 'dry well' or exactly what it would be used for. Sometimes a structure like that would be used to run stormwater or wastewater into so it can soak into the ground, but they are usually filled with gravel so they will hold lots of water. And therefore should not collapse like a tank.

You can drain something by siphon method, look in do-it yourself book for instructions, Do not use your mouth to form suction. I watched someone do that with garden hose & gasoline , he got a mouth full & it wasn't pretty. Gagged for some time. Good light would be smart to use to see what it is you are getting into. Well collapsing, mine of some kind, any coal mining or oil wells no longer in use in area?? Hidden room full of money?? could be lot of things, hope there isn't quicksand around there. Might have a rope tied securely to a nearby tree & around you so you don't get "in over your head" literally!! Good luck & best to get started, not likely it's going to improve. Don't park car there or stand there as it could collapse. Let us know what you find!

Do not siphon anything with your mouth and be careful digging for that matter if you think it may be a heating oil tank.

You never know what is in these things and we have dug them up and found them illegally full of gas. Not a good thing if you are running something that is not intrinsically safe.

Look for fill/vent ports around the home.

You can also call the county/state and pull old historic maps on the home that should have tanks or wells indicated in many cases.

Check the permits as well.

I don't think it is a septic tank, unless the garage was built later. No one would intentionally cover an active septic tank because you have to clean them out regularly.

Some doughhead that owned our place actually built an addition overtop of the septic tank! It had to be cleaned out by running the hose strait down the ancient dry trap toilet through the bathroom window. The toilet had a flapper on it that dumped straight down into an old 60 gallon drum, like the old toilets on trains that dumped straight onto the tracks below. Then they used the addition as a bedroom. I had to abandon it and put in a holding tank. Not a great smell to wake to. Nothing is impossible.

It's just as likely that the soil was not fully compacted when the pavement was originally put in, and it subsided a bit over time. Water accumulates, and if you're in freeze/thaw country, it breaks up the pavement.

Canuck: that reminds me of Garrison Keillor's tale about the guy who takes his backhoe over to his parents' house to investigate the soggy spot in the lawn, and finds out their septic tank was never a septic tank but just a buried '47 Chevy with a pipe going into the driver's side window!

Too bad we never heard back from the OP. I wonder how this turned out.