If IRS does not accept your offer in compromise, you can enter into a payment plan to pay your tax bill over time. If you cannot make any payments at this time, they may put their collection action on hold for a while in hopes that you will have sufficient funds to make payments later. They will file a tax lien which does mess up your credit. The good news is most tax liens expire in ten year and the IRS has in the past not taken any action to extend that time. Let us know if you need help dealing with the the IRS collection department or trying for an offer in compromise.
Be aware that most of the Companies on TV that advertise they can reduce the amount owed the IRS will take an advance payment of $4,000 to $10,000 (non-refundable) and more often than not fail to get your offer in compromise accepted. You should deal with reputable CPAs or Attorneys if you hire someone to file one for your.
Read more about Offers in Compromise on the IRS website.
Video on how to file for an IRS Offer in Compromise