If you owe back taxes to the IRS, a change in federal tax collection should be of interest to you. Starting April 2017, the Internal Revenue Service is turning some overdue accounts over to private collection agencies. Find out how this change in federal tax-collecting could affect you.
Which taxpayers are affected?
If you have tax debt going back several years, you could see your account turned over to a private collection agency. However, the IRS states on its website that this does not apply to taxpayers who are:
- Subject to pending or active offers in compromise
- Subject to an installment agreement
- Subject to a right to appeal
- Classified as innocent spouse cases
- Victims of tax-related identity theft
- In designated combat zones
- In presidentially declared disaster areas and requesting relief from collection
- Currently under examination, litigation, criminal investigation, or levy
- Under the age of 18
- Deceased
And even if your account is turned over to a private collection agency, it would return to IRS management if your circumstances change to reflect any of the scenarios listed above.
How will affected taxpayers be notified?
If your account is turned over to a private collection agency, expect to receive two letters:
1) Letter from the IRS, which should include:
- Notification that your account has been transferred to a private collection agency
- Name of the collection agency
- How much you owe
- Your unique taxpayer authentication number
- Copy of IRS Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency
2) Letter from the private collection agency, which should include:
- Name of the collection agency
- How much you owe
- Your unique taxpayer authentication number
What if you question the debt or the amount?
Do the same thing you would do with any other type of debt collector. The FTC advises you to write to the collection agency and request debt validation.
You can also check your account balance at IRS.gov/balancedue.
Which agencies are collecting debt for the IRS?
The IRS has selected four private collection agencies to work with, one of which will be assigned to you:
CBE
P.O. Box 2217
Waterloo, IA 50704
1-800-910-5837
ConServe
P.O. Box 307
Fairport, NY 14450-0307
1-844-853-4875
Performant
P.O. Box 9045
Pleasanton CA 94566-9045
1-844-807-9367
Pioneer
PO Box 500
Horseheads, NY 14845
1-800-448-3531
If you’re not happy with the collection agency assigned to you, you’re not stuck with them. As stated on the IRS website, “If you do not wish to work with the assigned private collection agency to settle your overdue tax account, you must submit a request in writing to the private collection agency.”
How can you spot scams?
The IRS is already anticipating fraudulent phone calls to taxpayers trying to take advantage of this new debt collection process. If you get a call, the FTC says to watch for these red flags:
- Calls made from a collection agency before you have had any prior contact from the IRS about the debt. Forbes says the IRS will try to contact you multiple times before transferring your debt to a collection agency.
- Robocalls or pre-recorded messages. If the collection agency calls you, it will be a live person.
- Requests for a credit card, debit, gift card, or wire transfers. The private collection agencies hired by the IRS will only instruct you to pay one of two ways – 1) online via IRS.gov/payments, or 2) by sending a check directly to the IRS, made out to the United States Treasury.
- Inability to provide you with the unique taxpayer authentication number sent to you in the two letters notifying you of the new collection activity
Why is this happening now?
On December 4, 2015, President Obama signed the Fixing America’s Surface Transportation Act (FAST Act), which requires that the IRS use private collection agencies for some federal tax debts.
What if your debt collection rights are violated?
All private debt collectors are subject to debt collection laws. Those collecting on behalf of the IRS are no exception. As stated in Publication 4518:
“Private collection agencies under contract with us to collect overdue tax accounts are, with some exceptions set forth in the Internal Revenue Code, required to conform to the rules, regulations, and provisions of the Fair Debt Collection Practices Act. Specific provisions of this act prohibit private collection agencies from threatening or intimidating taxpayers.”
And these private collection agencies are not authorized to take any enforcement action against you (though the IRS certainly can, such as filing a lien or issuing a levy).
If you believe the private collection agency assigned to you has violated your rights, submit a complaint to the Treasury Inspector General for Tax Administration (TIGTA):
- Online at TIGTA.gov
- Write to:
Treasury Inspector General for Tax Administration Hotline
Post Office Box 589
Ben Franklin Station
Washington, DC 20044-0589
Where can you turn for help if you can’t pay and can’t afford an attorney?
IRS Publication 4518 refers taxpayers to:
- Taxpayer Advocate Service
- IRS Publication 4134 for a list of Low Income Taxpayer Clinics (LITCs)
- Directory of Federal Tax Return Preparers
- Referral system operated by your state bar association, state or local society of accountants or enrolled agents, or another nonprofit tax professional organization
Whatever you do, don’t ignore these collection attempts. And even if your account hasn’t been turned over to a collection agency, don’t wait to take care of back taxes. The sooner you can work something out — either through a private collection agency or directly with the IRS — the sooner you can start getting out of debt, repairing your credit, and realizing your financial goals.
