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IRS Private Debt Collection Program About to Begin

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Apr 5th 2017
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Taxpayers who still haven’t paid old tax bills shouldn’t be surprised if they’re contacted by a private debt collector that the IRS has now begun using.

The IRS said on April 4 that it will start sending letters this week to a small group of taxpayers whose accounts are being transferred to one of four private debt collection agencies.

The four companies hired by the IRS to make collections are:

  • CBE Group, Cedar Falls, IA
  • ConServe, Fairport, NY
  • Performant, Livermore, CA
  • Pioneer, Horseheads, NY

A taxpayer’s account will only be assigned to one of these agencies, not to all of them. No other private group is approved to represent the IRS.

The new private debt collection program was authorized by the Fixing America’s Surface Transportation Act, which was enacted by Congress in December 2015. The law allows designated contractors to collect, on behalf of the government, outstanding “inactive tax receivables.”

Under Code Section 6306(c), “inactive tax receivable” means:

  1. At any time after assessment, the IRS removes the receivable from active inventory for lack of resources or inability to locate the taxpayer;
  2. More than one-third of the period of the applicable statute of limitation has lapsed and the receivable hasn’t been assigned for collection to any IRS employee; or
  3. For a receivable that has been assigned for collection, more than 365 days have passed without interaction with the taxpayer or a third party for purposes of furthering its collection.

As a condition of representing the IRS, the private collection agencies must “respect taxpayer rights, including, among other things, abiding by the consumer protection provisions of the Fair Debt Collection Practices Act,” the IRS said last September.

Taxpayers assigned to a private collection agency would have had multiple contacts from the IRS in previous years and still have an unpaid tax bill.

“The IRS is taking steps throughout this effort to ensure that the private collection firms work responsibly and respect taxpayer rights,” IRS Commissioner John Koskinen said in a prepared statement. “The IRS also urges taxpayers to be on the lookout for scammers who might use this program as a cover to trick people. In reality, those taxpayers whose accounts are assigned as part of the private collection effort know they have a tax debt.”

As the program rolls out this week, a few hundred taxpayers will receive mail, followed by phone calls. Later this spring and summer, thousands of taxpayers will be notified. The IRS cautions that the collection agencies will only call about a tax debt the person has known about for years and has previously been contacted about by the IRS.

“The people included in the private collection program typically already know they have a tax issue,” Koskinen said. “If you get a call from someone saying they’re from one of these groups and you’ve paid your taxes, that’s a sure sign of a scam.”

The IRS offers the following guidelines to prevent taxpayers from being victimized by fraudsters abusing the new program:

  • Taxpayers with overdue taxes will always receive multiple contacts, letters, and phone calls, first from the IRS, not private debt collectors.
  • The IRS will notify taxpayers before transferring their accounts to private collectors.
  • Taxpayers will be told which collection agency they’ve been assigned to and how to contact it.
  • Once the IRS letter is sent, the collection agency will mail the taxpayer to confirm the account transfer. To protect taxpayers, the letters from the IRS and the collection agency will include information that will help taxpayers identify the amount owed and assure them that future calls from the collection agency are legitimate.
  • The collection agencies are authorized to discuss payment options and set up payment plans with taxpayers. (Any tax payments must be made electronically or by check made payable to the US Treasury, not to the collection agency or any individual.)
  • The collection agencies cannot take enforcement actions, such as a tax lien or levy, against taxpayers.
  • Taxpayers should be alert to calls from fraudsters posing as collection agencies. The IRS is working with partners in the tax community and law enforcement about possible scams.

If taxpayers are unsure if they have an unpaid tax debt from a previous year, they can check their account balance on IRS.gov.

Related articles:

IRS Rolls Out New Private Debt Collection Program
My Open Letter to Marco Rubio About the IRS Using Private Debt Collectors 

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