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Private Collectors of Tax Liabilities – What to Know

In 2015 Congress approved the Internal Revenue Service’s use of private collectionfinal_notice_stamp1-150x150 agencies. The IRS is finally rolling this out, starting in April 2017.  To help prevent scams, the IRS has stated it will always notify taxpayers first that their debt is being transferred to one of the approved agencies.

Below is a list of the approved agencies:

  • CBE of Waterloo, Iowa
  • ConServe of Fairport, NY
  • Performant of Pleasanton, CA
  • Pioneer of Horseheads, NY

The IRS has stated that taxpayers with overdue taxes will always receive multiple IRS contacts (letters and/or phone calls) before a debt is transferred.  Therefore, there should be ample opportunity to sort out the debt prior to the transfer of debt to one of the above agencies.  If the IRS does transfer debt, they will first send a letter to the taxpayer and their tax representative informing them that their account is being assigned to a collection agency, and providing the name and contact information for the collection agency.  This mailing will include a copy of IRS publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency.

The assigned collection agency will also send its own letter to the taxpayer and their representative confirming the account transfer.  To protect the taxpayer’s privacy and security, both the IRS letter and the collection firm’s letter will contain information that will help the taxpayer identify the tax amount owed as well as other information that should provide assurances to the taxpayer that future collection agency communications they receive are trustworthy.

The employees from these agencies can identify themselves as contractors of the IRS collecting taxes.  They are required to follow the Fair Debt Collection Practices Act rules, and like IRS agents, should be courteous and must respect taxpayer rights.  The collection agencies are authorized to discuss payment options, including setting up payment agreements with the taxpayer. It is important to note that any payments a taxpayer makes should only be to the IRS (United States Treasury) and not to the collection agency.

Taxpayers are reminded to be aware of scammers posing as private collection agencies.  The contacting agency should be one of the above-approved agencies and should be contacting you regarding a long overdue debt that the taxpayer is aware of and one that the IRS has previously contacted the taxpayer about on multiple occasions.  If a taxpayer is unsure about an unpaid debt, they can go to the following web address to check their account balance: www.irs.gov/balancedue .  Please note that the application process requires about 15 minutes to sign-up and may not be available to all taxpayers.

Here are some things that scammers often do but the IRS and its contractors will never do:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes, and if a case is assigned to one of the authorized collection agencies, both the IRS and the authorized collection agency will send the taxpayer a letter. Payment will always be to the United States Treasury.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone. For more information, visit the “Tax Scams and Consumer Alerts” page on IRS.gov.

Please note that some tax bills cannot go to private collectors, if:

  • There is a pending or active offer-in-compromise or installment agreement;
  • It is an innocent spouse case;
  • The taxpayer is deceased, under age 18, in a designated combat zone, or is a victim of identity theft;
  • The taxpayer is under IRS audit, in litigation, criminal investigation, or levy; or
  • The taxpayer has gone to IRS Appeals.
  • In presidentially declared disaster areas and requesting relief from collection

If your past due tax liability has not been transferred to a collection agency, you may take steps to avoid this from happening by coming forward, and either paying what you owe or setting up a payment plan.  Taxpayers may qualify for one of several payment options. For example, consider setting up a payment agreement with the IRS. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS. With the Online Payment Agreement, no paperwork is required, there is no need to call, write or visit the IRS and qualified taxpayers can avoid the filing of a Notice of Federal Tax Lien if one was not previously filed. Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.

It should be noted that if your tax debt is more than $50,000, your travel could be restricted as under current rules, the IRS can request that the State Department revoke your passport.

To make a complaint about a private collection agency or report misconduct by its employee, a taxpayer can call the TIGTA hotline at +1-800-366-4484 or visit www.tigta.gov or write to:

Treasury Inspector General for Tax Administration Hotline
Post Office Box 589
Ben Franklin Station
Washington, DC 20044-0589

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