- The IRS can now use private collection agencies to collect unpaid taxes.
- If you owe back taxes and have been in contact with an IRS representative about your debt, you might be reassigned to one of four vetted agencies that will work with you to resolve your debt.
- This article will give you concrete suggestions on how to protect yourself from fraudulent collection claims.
Many Americans find themselves in financial difficulty at some point. If you owe back taxes to the Internal Revenue Service (IRS), a law change in 2015 might affect how the IRS attempts to collect your tax debt. Congress enacted a law that allows private collection agencies (PCAs) to contact you and collect the money owed. But the agencies are required to operate within established consumer protections (The Fair Debt Collection Practices Act), so your rights will be respected.
Who Will Private Agencies Contact?
Not everyone who owes tax debt is eligible to be contacted by a private agency under the new law. “Here’s a simple rule to keep in mind. You won’t get a call from a private collection firm unless you have unpaid tax debts going back several years and you’ve already heard from the IRS multiple times,” former IRS commissioner John Koskinen said. “The people included in the private collection program typically already know they have a tax issue.”
The IRS excludes several types of accounts entirely:
- Minors under the age of 18
- Individuals serving in designated combat zones
- Victims of tax-related identity theft
- Individuals currently under examination, litigation, criminal investigation, or levy
- Those subject to pending offers, appeals, or installment agreements
- Someone classified as an innocent spouse (relieved from tax obligation for unreported or improperly recorded income by a spouse or former spouse)
- Anyone in a presidentially declared disaster area requesting relief from collection
Which Debt Collectors Are Authorized by the IRS?
The IRS has authorized only four agencies to collect your tax debt. If you’re ever contacted by someone other than the IRS, you can cross-check with this list and feel confident that if they’re not listed here, they’re not working on behalf of the IRS.
- CBE in Waterloo, Iowa: 1-800-910-5837
- ConServe in Fairport, New York: 1-844-853-4875
- Performant in Pleasanton, California: 1-844-807-9367
- Pioneer in Horseheads, New York: 1-800-448-3531
How Can I Protect Myself?
“The IRS is taking steps throughout this effort to ensure that the private collection firms work responsibly and respect taxpayer rights,” Koskinen said. “The IRS also urges taxpayers to be on the lookout for scammers who might use this program as a cover to trick people.” In other words, the IRS trusts only the four companies listed above, and anyone else might be perpetrating a fraud.
Here’s what you need to know about how you will be contacted:
See More >> This Guy Resolved His $8,597 Tax Debt - Learn His Methods!
- The IRS will always notify a taxpayer before transferring his or her account to one of the private collection agencies.
- Your account will only be handled by one PCA, not all four.
- Your initial IRS notification will come by letter. The agency will send one copy to you and one copy to your tax representative. No one from the IRS will initiate contact via text message, social media, or email. A mailed letter is the official channel.
- That letter will contain contact information for the private collection agency.
- You’ll be sent a copy of “What You Can Expect When the IRS Assigns your Account to a Private Collection Agency,” aka Publication 4518, with which you can familiarize yourself in advance.
- Once you receive the letter and the information booklet, the PCA will send a letter identifying itself as your assigned collection agency.
- Both letters will include information that will help identify you and the amount of debt you owe. The PCA will have access to your identifying information so you can be confident the person contacting you is an authorized representative.
- The PCA representative will discuss your situation fairly and respectfully, under the conditions set up in the Fair Debt Collection Practices Act. This representative is authorized to set up payment plans with you.
- However, you should never send a payment to any agency other than the IRS. No collection agency is authorized to collect money. You always pay the IRS directly.
- No PCA representative can harass, abuse, or annoy you. They must call between the hours of 8 a.m. and 9 p.m. in your time zone and cannot threaten you in any way over your unpaid debt.
- Never give any information about yourself, your family, or your tax debt to anyone other than the IRS or the four named authorized agencies. Recognize that anyone who asks you to send them money directly, makes threats, or uses scare tactics are not acting on behalf of the IRS. You can report fraudulent calls to The Treasury Inspector General for Tax Administration.
How Will a PCA Help Me with My Tax Debt?
Once a PCA representative has confirmed your identity and you feel confident you’re working with one of the authorized agencies, that representative has authority to help you figure out the best way to settle your tax debt. The IRS allows you to set up a plan to pay your taxes within a specified time. If you pay within 120 days, no additional fees will be added to your debt. The IRS also offers payment plans longer than 120 days for a setup fee. You can reduce your setup fees by applying online and setting up a direct debit payment plan.
What Steps Can I Take to Manage My Tax Debt?
Now that you’re familiar with how the IRS will try to collect your debt, browse Solvable’s many other resources and feel empowered to take control of your tax debt. The best way to avoid being assigned to a PCA is to be proactive and contact the IRS to set up a plan that will help you manage your debt. The agency offers options for low-income families, families in the path of weather disasters, and plenty more help when you need it.