The IRS announced the beginning of the use of private collection agencies to collect overdue taxes in News Release IR-2017-74. The program, mandated by Congress in late 2015, requires the IRS to transfer certain overdue accounts to private collection agencies.
The release begins by describing how the program will work, noting that the IRS will first notify the taxpayer that their account is being transferred to a private agency and will send along Publication 4518 to describe the process for the taxpayer in question.
The news release informs taxpayers that only the following four collection agencies are participating in the program:
- CBE Group of Cedar Falls, Iowa;
- Conserve of Fairport, N.Y.;
- Performant of Livermore, Calif.; and
- Pioneer of Horseheads, N.Y
The assigned firm will send its own letter following the IRS letter being sent informing the taxpayer the case has been assigned to them. There will be information on the letters that will allow taxpayers to confirm with the party they are speaking with that they are the authorized representative.
The release notes that the agency can take the following actions:
The private firms are authorized to discuss payment options, including setting up payment agreements with taxpayers. But as with cases assigned to IRS employees, any tax payment must be made, either electronically or by check, to the IRS. A payment should never be sent to the private firm or anyone besides the IRS or the U.S. Treasury. Checks should only be made payable to the United States Treasury. To find out more about available payment options, visit IRS.gov/Payments.
However, the notice goes on to note that the collection agencies are not authorized to take enforcement actions against the taxpayer, but rather only IRS employees can take such actions as filing a notice of Federal Tax Lien or issue a levy.
The is s new Private Debt Collection page on the IRS website to provide information on the program.
The release goes on to discuss an issue that has concerned many since Congress first mandated the program—the problem of phone scams where the scammer claims to be a collection agency contacting taxpayers on behalf for the IRS.
The release begins with a basic caution that you may want to share with clients who don’t have tax problems, but might be easily frightened by a scammer:
People should remember that these private collection firms will only be calling about a tax debt the person has had – and has been aware of – for years and had been contacted about previously in the past by the IRS.
“Here’s a simple rule to keep in mind. You won’t get a call from a private collection firm unless you have unpaid tax debts going back several years and you’ve already heard from the IRS multiple times,” Koskinen said. “The people included in the private collection program typically already know they have a tax issue. If you get a call from someone saying they’re from one of these groups and you’ve paid your taxes, that’s a sure sign of a scam.”
Specifically, the release points out that an unexpected call from someone claiming to be with or represent the IRS making threats against the taxpayer is a key warning sign of a fraud.
The release also repeats some of the basic warning signs for scammers, doing things that the IRS simply won’t do. The release provides:
Whether or not a taxpayer’s account is assigned to a private collection agency, the IRS warns taxpayers to beware of scammers pretending to be from the IRS or an IRS contractor. Here are some things the scammers often do but the IRS and its contractors will never do.
- Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes, and if a case is assigned to a PCA, both the IRS and the authorized collection agency will send the taxpayer a letter. Payment will always be to the United States Treasury.
- Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
- Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
- Ask for credit or debit card numbers over the phone.