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Collection Agencies to Begin Collecting Old Tax Debts for IRS

Sean McMahon

IRS Hires Private Debt Collectors

Starting in the Spring of 2017, the Internal Revenue Service (IRS) will use four private debt collection companies to recover old tax debts. Congress authorized the use of private collection agencies in the 2015 Fixing America’s Surface Transportation Act (FAST Act).

If you owe money to the IRS, your tax debt may be handed over to one of four private collection agencies selected by the IRS to try to recover old tax debts.

Don’t Fall Victim to a Tax Scam

Taxpayers need to be vigilant of tax scams. Here’s what you need to know:

  • The IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The IRS never contacts a taxpayer for the first time with a phone call. If you receive a phone call telling you that you owe unpaid taxes and must pay immediately, it is a scam.
  • The agency will then send a second, separate letter to the taxpayer and their representative confirming this transfer. Check the IRS website for a list of the four authorized collection agencies: IRS Private Debt Collection https://www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection.
  • Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes.
  • Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act (FDCPA)and must be courteous and respect taxpayer rights. Consumer Information FDCPA https://www.consumer.ftc.gov/articles/0149-debt-collection.
  • Private collection agencies will not ask for payment on a prepaid debit card.
  • Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.

Offers in Compromise

If you have a pending or active Offers in Compromise (OIC), your tax debt will not be sent to a collection agency. Here are the ten types of cases that will not be given to private collection agencies:

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

Visit the IRS website for additional information https://www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection