Private Tax Debt Collectors and How to Deal With Them
February 14 2018
Following approval by Congress in 2015, private tax debt collectors will contact you to pressure payment of tax debt. If the IRS passes you off to a private company, they will send you a letter to confirm so. The IRS has employed this strategy before, without a snag or two. Scammers took this as an opportunity to pose as collection agencies, demanding payment from unwitting taxpayers. To avoid scams and take care of your debt safely and responsibly, take a look at our tips below.
A few things you need to know: only four agencies take over delinquent accounts (CBE, Conserve, Fairpoint, and Pioneer), and the IRS will only assign you to one. There are several situations in which taxes are owed but you will not be passed off to an agency. They include when an offer in compromise or installment plan application is in process, it is an innocent spouse case, you are under audit, you have gone to IRS Appeals, the taxpayer is deceased or under 18, or the taxpayer is a victim of identity theft.
If none of these situations apply to you and you do run the risk of being contacted by one of these agencies, we have some practical tips:
The IRS taps private tax debt collectors only after a certain amount of time
Do not expect a collection agency to contact you about a debt you do not already know if. The IRS deploys them on old tax debts, and they have contacted you several times via mail. If you don’t know if you’ve paid your debt, check out irs.gov/balancedue.
Confirm their identity
Do not communicate with someone claiming to be from a collection agency as an IRS contractor unless their information matches the information you received in the letter from the IRS. They will only work for one of the four agencies listed.
Do not provide personal information
Although, they will know the amount you owe and some standard information, they will not know much else. Do not offer any information relating to your finances.
Do not send them payment or agree to enforcements
You must make all payments directly to the IRS by check or electronically, never to an agency. The agencies contract for communication only, not to take payments or make enforcements such as liens and levies. The biggest red flag of identifying a scammer is when they demand immediate payment or threaten recourse.
Consider other options when dealing with private tax debt collectors
To avoid the stress of constant contact by a private agency about your debt, work with your tax consultant and the IRS to set up a solution that works for your financial situation. To set up a payment plan for debt under $50k, you can do so online without paperwork or much hassle. Alternatively, you can request a payment plan by filling out Form 9465. For those in particular hardships, you can possibly opt into an offer in compromise. You can use a tool on the IRS website to confirm qualification.
Understand that the IRS contracts these private agencies to communicate with you and encourage payment to the IRS. They must follow respectful protocol and adhere to taxpayer rights. If you feel your taxpayer rights are being violated or you’re being targeted by a scammer, contact the IRS and report misconduct.
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