Private Collection Agencies
"Collecting More Taxes Than is Absolutely Necessary is Legalized Robbery." Calvin Coolidge
In September of 2018, the IRS sent approximately 700,000 delinquent tax debt accounts to private debt collectors. See, TIGTA Semiannual Report to Congress. For those of you who owe back taxes, you may have been able to slide under the radar prior to now with IRS backlog and the federal government shutdown. The day of reckoning has come. The private debt collectors are motivated and it is likely that outstanding and old tax debt accounts will soon be getting attention.
The new IRS private debt collection program provides for four private debt collection agencies across the country to handle inactive, older, and overdue tax accounts. Previously the IRS lacked the funds and manpower to work on these old and inactive accounts; but not anymore. The four new private debt collection companies are located in Iowa, California, and two are in New York.
Ten types of delinquent tax accounts will remain with the IRS. The types of accounts that will not be sent to the private collection agencies are special cases, such as taxpayers who reside in officially declared disaster areas, victims of identity theft, and innocent spouse cases. See, IRS Private Debt Collection.
Taxpayers may request, in writing, to be transferred to the IRS for debt collection. The request is to be made to the private debt collection agencies. The private debt collectors, as a condition of receiving a government contract, must abide by the Fair Debt Collection Practices Act. Two notices will be sent advising the taxpayer of the transfer to private debt collectors; no phone calls will be placed until several notices have been sent. The debt collection companies will not ask for payment on a prepaid debit card, iTunes card, or gift card. Payments should be made directly to the U.S. Treasury and sent directly to the IRS, not the private collection agency.
It is important to note that these old and inactive delinquent tax accounts are subject to the statute of limitations. If you are one of the unfortunate who received the dreaded notice from the private debt collectors, it is important to immediately contact your tax resolution attorney. Your tax resolution attorney can ensure that the only tax debt you pay is what is actually owed under current law and that the amount you pay is the correct amount to be paid. Penalty abatements, installment agreements, and offers in compromise are still offered through the private debt collection agencies.
Kelly J. Gwin, Esq. represents individuals and small business with state, federal and international tax debt resolution and compliance.