IRS Hires Private Debt Collection Agencies to Collect Back Taxes

With the increasing backlog of unpaid taxes, the Internal Revenue Service announced that it had begun a new private collection program of certain overdue federal tax debts. The IRS says it has hired four private debt collection firms to round up outstanding payments from taxpayers who have long overdue payments.

Authorized under a federal law enacted by Congress last December, the debt collection program enables the IRS to use these designated firms for the collection of outstanding inactive tax receivables on the government’s behalf.

The agencies selected by the IRS to implement the programs are:

• CBE Group of Cedar Falls, Iowa
• Conserve of Fairport, N.Y.
• Performant of Livermore, Calif. and
• Pioneer of Horseheads, N.Y.

How the New Program Works?

These debt collectors won’t contact people out of the blue. Taxpayers with long overdue tax bills will receive multiple notices through mails, letters and phone calls from the IRS, not from the private debt collectors. You’ll also get a written notice from the IRS informing you that your account has been transferred to one of the four collection agency – your account will only be assigned to one and not all of the firms.

The letter will include the name and contact information for the collection agency as well as a copy of IRS Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency. The collection agencies will then send a separate letter informing the taxpayer that their account has been transferred to them.

These private collection agencies will be able to identify themselves as IRS tax collection contractors, will respect taxpayer’s rights and abide by the consumer protection provisions of the Fair Debt Collection Practices Act among others. They are also authorized to discuss payment options with taxpayers, including setting up payment agreements.

Watch out for Phone Scams

While people may be preparing to get their finance in order and balance the book, the IRS reminds taxpayers to be on the lookout for scammers posing themselves as private debt collection firms. People will only be contacted by these private collection firms if there had been a long overdue tax debt – and has received numerous notifications from the IRS.

Simply, you won’t get a call from the designated debt collectors unless you have unpaid tax debts going back several years and the IRS has already notified you multiple times. You should disregard any call from someone claiming they’re from one of these groups and you’ve unpaid taxes.

While these agencies are authorized to set up payment agreements and discuss payment options with taxpayers, any form of payments must be made either electronically or by check, to the IRS. Calls demanding immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer should not be acknowledged. Payments should never be sent to the private firm or anyone besides the IRS or the U.S. Treasury.

Also, people should remember that these agencies are not authorized to take enforcement actions against taxpayers. Only IRS employees can take these measures, such as filing a notice of Federal Tax Lien or issuing a levy. Unexpected and threatening calls from someone claiming they represent the IRS is a warning sign people should take note.