On December 2015, Congress approved the use of private debt collection companies to collect “inactive tax receivables” on behalf of the IRS. This isn’t the first time Congress has tried to direct the IRS to outsource unpaid tax bills to private agencies for collections. About 20 years ago, the IRS tried the same thing but the process came to a halt amid criticism about unfair practices and harassment. In order to help prevent scams, the IRS will now first notify taxpayers that their debt is being farmed out to a private debt collector.
Before overdue taxes are passed on to a private debt collection, the IRS will reach out to taxpayers through letters and follow up phone calls. After many failed attempts, the IRS will send a letter to the taxpayer informing them that their account is being assigned to a collection agency, and provide them with the agency’s name and contact information. A copy of IRS Publication 4518: “What you can expect when the IRS assigned your account to a private collection agency” will be attached.
It’s important to keep in mind that only four private collection agencies are used by the IRS:
- CBE Group of Cedar Falls, IA
- Conserve of Fairport, NY
- Performant of Livermore, CA
- Pioneer of Horseheads, NY
In order to protect taxpayer information, one of the four agencies listed above will send its own letter to the taxpayer. Both letters will contain information that will assist taxpayers in identifying the amount owed to the IRS along with reassurance that any future collection agency calls by the assigned agency are legitimate. Payment options will be available to taxpayers and all payments must be made electronically or by check directly to the IRS and not to the debt collector or any other person. Checks should only be made payable to the United States Treasury.
In an effort to decrease any tax scams, it’s crucial that taxpayers understand what private collectors can and cannot do. The debt collector will never ask the taxpayer to pay in gift cards or wire transfers to anyone other than the IRS. Be sure to never give out your credit or debit card numbers over the phone, pay through the IRS payment options online. Debt collectors cannot threaten a taxpayers with arrest or deportation. Unless you have unpaid tax debts going back several years and you’ve heard from the IRS multiple times, you will not get a call from a private collection firm. If you’d like to learn more about the new private debt collection program, visit the “Private Debt Collection” page on www.IRS.gov.
For more information on whether you’re at risk contact your LSL Advisor – 949.829.8299.
