IRS Begins Private Debt Collection - What You Need to Know




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Apr 28, 2017

The IRS has hired four companies - CBE Group, ConServe, Performant and Pioneer Credit Recovery. It started handing over cases to them, where the taxpayer owes the IRS $50,000 or less, in April. The new program, which was authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables.

The IRS says that delinquent taxpayers whose accounts are turned over to the private collection agencies will have already received many letters by mail from the IRS, urging them to pay and warning them that the debt would be turned over to a third party for collection. However, unlike IRS agents, who are not usually allowed to call delinquent taxpayers by telephone, the outside debt-collection agencies will be able to do so. Unfortunately, the private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes. This has been a serious problem in the past with scammers calling people and demanding payment immediately.

How will you know if a caller is legitimate? The IRS will give taxpayers and their representative written notice that the accounts are being transferred to the private collection agencies. The agencies will send a second, separate letter to the taxpayer and their representative confirming this transfer. Also, private collection agencies will not ask for payment on a prepaid debit, iTunes or gift card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.

To make a complaint about a private collection agency or report misconduct by its employee, call the Treasury Inspector General for Tax Administration (TIGTA) hotline at 800-366-4484 or visit www.tigta.gov

If you are delinquent in your payments to the IRS, the best practice is to contact your tax accountant rather than attempt to deal with the IRS or one of their private collection agencies on your own. The professionals at Terry Lockridge & Dunn are available to help you. We can be reached in Cedar Rapids at 319.364.2945, or in Iowa City at 319.339.4884.


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