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IRS Is Using Private Debt Collectors

  • 31 January 2017
  • Author: Alexander Carr
  • Number of views: 2987
IRS Is Using Private Debt Collectors

The IRS is behind on collecting more than $400 billion in back taxes but it doesn’t plan on erasing those debts just yet. Instead, Congress mandated the use of private debt collectors for help. In fact, the IRS plans to begin private collection of certain overdue federal tax debts as early as this spring.

According to the Journal of Accountancy, the tax debts that are included under the act are old, uncollected accounts that the IRS hasn’t pursued in more than a year. These include any tax receivable that has been removed from the IRS’s active inventory due to a lack of resources or an inability to find the taxpayer; that for which more than one-third of the applicable limitation period has passed and no IRS employee has been assigned to collect the receivable; or that has been assigned for collection, but more than 365 days have passed without interaction with the taxpayer for purposes of furthering collection of the receivable.

Here’s what you should know, straight from the IRS itself:

  1. Only four contractors have been selected to implement the new program. These private debt collectors are Conserve of Fairport, New York; Pioneer of Horseheads, New York; Performant of Livermore, California; and CBE Group of Cedar Falls, Iowa.
  2. Taxpayers with accounts that will be handed over to these collection agencies will receive written notifications; first from the IRS and then a second notice from the contracting organization confirming the transfer.
  3. No payments should be made to anyone other than the IRS. Never pay an IRS debt in the form of a prepaid debit card or paid to the private collection agency itself. Instead, taxpayers will be informed about electronic payment options for taxpayers at IRS.gov/Pay Your Tax Bill or sending a check by mail. 
  4. You may refuse to work with the assigned private collection agency to settle the overdue account but, in order to do so, you must submit a request in writing to the contractor assigned to you.
  5. Accounts the IRS will not be handing over to the private debt collectors include those of taxpayers who are deceased, under the age of 18, currently in designated combat zones, victims of tax-related identity theft, currently under legal examination, currently compromising on offers, subject of an installment agreement, subject to right of appeal, classified as an innocent spouse in a case, or living in a declared disaster area and requesting relief.

This isn’t the first time the IRS has been required to use third-party debt collectors. Previous attempts caused widespread concern about how private debt collectors treated taxpayers and their personal information, which the IRS says it takes very seriously. If you have any concerns about the possibility of being contacted, let us know. We’re here to help.

Image Copyright: andreypopov / 123RF Stock Photo




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