Can settling a IRS debt damage your credit rating?

Question

I've seen commercials on tv from companies who can help people who owe the IRS thousands, settle for pennies on the dollar. I heard this can do damage to your credit rating. Is this true? I don't owe them any money. I was just curious.

Answer 1

your credit rating is all ready damaged since the IRS will usually file a lien on your anyways to protect their interest, and unlike other judgements, the IRS and student loans survive bankruptcy and are good for 10 years from the date of filing.

as for the settlements ( called OIC or Offers In Compromise )

you can fill out the paperwork and submit and offer

there is no guarantee they will accept it either

either that or work out a payment arrangement

those tax lien settlement companies cannot guarantee acceptance in an OIC offer, but it's funny the want to paid up front anywhere from 2 to 5 thousand dollars to have them try, up front.

Answer 2

Yes, of course it will damage your credit.