If you have a tax liability with the IRS, you may be interested to know about a new program of the IRS. The Internal Revenue Service plans to begin partnering with private debt collection companies for the collection certain overdue federal tax debts from taxpayers as early as spring of 2017 and has selected four contractors to implement the new program.

The new program, authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government’s behalf, outstanding “inactive” tax liabilities. Authorized under a federal law enacted by Congress in December 2015, Section 32102 of the Fixing America’s Surface Transportation Act (FAST Act) requires the IRS to use private collection agencies for the collection of certain outstanding inactive tax liabilities.

These private collection agencies will work to collect on tax liability accounts where taxpayers owe money, but the IRS is no longer actively working to collect the tax liability. These are so called “inactive” tax liability accounts. According to the IRS, several factors contributed to the decision to allow the IRS to assign these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases.

IRS will Provide Taxpayers with Written Notice

The IRS will give taxpayers and their representatives written notice that the accounts are being transferred to the private collection agencies. The private tax collection agencies will send a second, separate letter to the taxpayer and their representatives confirming this transfer.

Private collection agencies will be able to identify themselves as contractors of the IRS in collecting taxes. Employees of these collection agencies must follow provisions of the Fair Debt Collection Practices Act and should be courteous and respect taxpayer rights.

The IRS should take steps to do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment under the threat of incarceration. However, taxpayers must also be diligent to avoid confusing scams with actual IRS collection actions.

Like the IRS, private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will be informed about electronic payment options for taxpayers on the IRS website that can be found at IRS.gov/payments. Importantly, after being contacted by a private debt collection agency on behalf of the IRS, payment of the tax liability by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.

Accounts Not Assigned To Private Collection Agencies

Some delinquent tax liability accounts will not be assigned to a private debt collection agency. The IRS will not assign accounts to private collection agencies involving taxpayers who are:

1. Deceased
2. Under the age of 18
3. In designated combat zones
4. Victims of tax-related identity theft
5. Currently under examination, litigation, criminal investigation or levy
6. Subject to pending or active offers in compromise
7. Subject to an installment agreement
8. Subject to a right of appeal
9. Classified as innocent spouse cases
10. In presidentially declared disaster areas and requesting relief from collection

Furthermore, private collection agencies will return delinquent tax liability accounts to the IRS if taxpayers and/or their accounts fall into any of these 10 situations after assignment to the private collection agencies.

Stay Vigilant Against Scams

You must stay on the lookout for unexpected scam phone calls from anyone claiming to be collecting on behalf of the IRS or the private debt collection agency.

The IRS will do everything it can do to help taxpayers avoid confusion and ensure they understand their rights and tax responsibilities when the IRS assigns their case to a private collection agency. This is particularly important in light of continuing scams where callers impersonate IRS agents and request immediate payment.

Even with private debt collection, you shouldn’t receive unexpected phone calls from the IRS demanding payment. When people have a tax liability, the IRS always sends several collection notices through the mail before making phone calls. The IRS does employ revenue officers that will make phone calls to the taxpayer. However, the IRS revenue officers will always confirm their requests in writing, and they will never ask for payment in the form of a prepaid debit card. In addition, IRS agents will not threaten to incarcerate the taxpayer for failure to pay the tax liability.

TIGTA Hotline

To make a complaint about a private collection agency or report misconduct by its employees, call the TIGTA hotline at 800-366-4484 or visit www.tigta.gov.

 

Who are the Private Debt Collection Companies?

The new program, authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax liabilities. As a condition of receiving a contract, these agencies must respect taxpayer rights including, among other things, abiding by the consumer protection provisions of the Fair Debt Collection Practices Act. The IRS has selected the following contractors to carry out this program:

CBE Group
1309 Technology Pkwy
Cedar Falls, IA 50613

Conserve
200 CrossKeys Office park
Fairport, NY 14450

Performant
333 N Canyons Pkwy
Livermore, CA 94551

Pioneer
325 Daniel Zenker Dr
Horseheads, NY 14845

Contact a Tax Attorney

If you have a delinquent IRS tax liability, you need to know your rights, and you have options to resolve your tax liability. You may want to pay the IRS in monthly installments, or you may qualify for an IRS offer in compromise to settle your tax liability for less than the total amount. Before you can enter into an installment agreement or submit an offer in compromise, you will need to make sure that your tax account is compliant with all filing requirements. Contact a tax attorney today to discuss your rights and your options.