> Does An IRS Offer In Compromise Hurt Your Credit?

• When you owe money to the government, it can be a stressful situation. Is there any way to reduce what you owe and avoid hurting your credit score? One possible solution is an IRS Offer In Compromise, which gives you the chance to settle your tax liabilities for less than the full amount due.

• Before jumping right in though, it's important to understand how this arrangement works and if it will affect your credit rating going forward. In today's blog post, we'll discuss everything you need to know about IRS offers in compromise, including whether or not they hurt your credit score.

> What Is An Offer In Compromise?

• The IRS' Offer in Compromise program is a generous option for taxpayers struggling with delinquent taxes. This initiative allows you to pay off your debt at a much-reduced rate than the total amount due so that you can get back on track and become tax compliant again. An OIC may be an option for taxpayers who are unable to pay their full tax debt due to financial hardship or if there is doubt as to the amount of tax owed.

• One common concern about OICs is whether they can hurt an individual's credit score. It is important for taxpayers to understand how OICs may affect their credit, as a low credit score can make it difficult to obtain loans, credit cards, and other financial products.

• While opting into an OIC won't directly have a negative effect on your credit score, other related activities such as missing payments or not honoring the contract could potentially result in lower scores.

> How Does Offer in Compromise Affect Credit Scores?

Offer in Compromise (OIC) does not directly affect credit scores. This means that simply applying for an OIC or having an OIC accepted by the IRS will not have an impact on an individual's credit score.

However, other actions related to OICs can potentially affect credit scores. For example, making payments on an OIC agreement can help to improve an individual's credit score. Alternatively, failure to honor an OIC agreement or missing payments can have a serious knock-on effect on one's credit score.

In order to avoid such consequences and maintain a healthy financial record, it is essential that taxpayers are familiar with their OIC contracts' exact details and pay any fees promptly.

>What Is The Impact Of Offer in Compromise

On Credit Reports?

• In the past, a Notice of Federal Tax Lien from the IRS could have been reflected on your credit report. But beginning in 2018, these liens are no longer recorded by major credit bureaus. Though this does not guarantee that lenders won't search public records for any active tax lien information you may have had in the past. So, it is important to take ownership of your debt and ensure that all payments are made on time.

• Similarly, an Offer in Compromise itself does not affect a credit report or credit score. However, if you fail to make the required payments according to the terms of your OIC agreement, then this could have a negative impact on your credit score.

• It’s important to note that even if an OIC is accepted, the IRS may take other collection actions such as wage garnishment or bank levies until the terms of the agreement are met. These actions may also show up on your credit report and could have a negative impact on your credit score.

• Overall, if you find yourself in a difficult tax situation and need assistance navigating the ins and outs of the Internal Revenue Service, an IRS Advocate may be the right option for you.

Tips For Maintaining Good Credit While Pursuing An OIC

If you are considering an IRS Offer in Compromise (OIC) as a way to resolve your tax debt, it is important to take steps to maintain good credit while pursuing the Offer in Compromise. Here are a few tips to help you do so:

Make payments on time: One of the most important factors in maintaining good credit is making payments on time. This includes making payments on an Offer in Compromise agreement if you have one in place. It is important to understand the terms of your Offer in Compromise agreement and make payments on time to avoid negative consequences for your credit.
Set up a payment plan with the IRS: If you are unable to make the full payment required by your Offer in Compromise agreement, you may be able to set up a payment plan with the IRS. A payment plan allows you to make monthly payments towards your tax debt and can help to ensure that you are able to meet your obligations while also maintaining good credit.
Seek the help of a financial professional or tax attorney: If you are unsure about how an Offer in Compromise may impact your credit or if you are having difficulty making payments, it may be helpful to seek the help of a financial professional or tax attorney to see if you qualify for IRS tax forgiveness. With the help of these experts, you can navigate your way through the Offer in Compromise process with confidence and assurance that your credit is safe. They provide valuable advice to ensure that their services contribute positively to your long-term financial health.

By following these tips and being proactive in managing your debt, you can maintain good credit while pursuing an Offer in Compromise.

> The Bottom Line:

Sometimes an Offer in Compromise is the best solution for your tax debt. It allows you to pay your taxes for less than what you owe, and it can help put an end to IRS collection actions. But one thing that people often wonder about is whether or not an Offer in Compromise will negatively affect their credit score. The answer is no—an Offer in Compromise does not hurt your credit.

In fact, it can actually help improve your credit over time because it shows that you’re actively working to resolve your outstanding tax debt. And if you keep up with your payments after reaching a settlement, that positive history will be reported to the major credit bureaus, which could help boost your score even more. If you’re considering an Offer in Compromise as a way to deal with your tax debt, don’t let concerns about your credit stop you from exploring this option.