The IRS has previously used private debt collectors. After rather underwhelming results and concerns regarding waste and fraud, the private debt collection program was eliminated. However, with the passing of the FAST Act, the IRS once again became obligated to hire and utilize private debt collectors to collect certain tax debts.

This latest foray into using private debt collectors is expected to be rolled out slowly but steadily. The IRS has stated that intends to begin the program in early spring 2017. This means that the first aspect of the program is already being rolled out. The IRS plans to slowly ramp up collection activities over the spring and summer months. In time, the private collections procedures are expected to be applied to tens of thousands of taxpayers or more. Taxpayers who may have unsettled tax debts are encouraged to familiarize themselves with the new program. A failure to do so can result in the taxpayer falling for common tax scams or ignoring legitimate debt collection attempts. However, careful tax planning can help taxpayers avoid tax debts in the first place.

Collection Attempts by Private Collectors will Only Apply to Certain Tax Debts

The first step in avoiding potential tax trouble due to the new private collection of back taxes program is to recognize that the IRS is currently only utilizing private collectors for certain types of existing tax debts. That is, the private collectors will only be assigned to overdue accounts that the IRS is no longer working or making collection attempts. This typically means that private collection attempts will be focused on older, overdue accounts that the IRS has stopped working. Therefore, if you believe that the IRS has simply given up, think again. You may soon face communications from a private debt collector regarding your unpaid taxes.

How Do I Know if the Callers is a Legitimate Debt Collector or a Scammer?

One of the most troubling aspects of this program is that it creates the potential for increased consumer confusion regarding who is a legitimate IRS agent and who is merely a scammer. In the past, consumer watchdogs could tell consumers a simple fact to protect against tax scams:  The IRS will never call you to collect a debt. Unfortunately, this fact is no longer true and private debt collectors can and will call taxpayers.

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The good news is that calls shouldn’t come out of the blue. Rather, the IRS states that taxpayers should receive several initial communications before a call from a third-party collector. These communications should include a letter from the IRS informing the taxpayer that the debt is being transferred to a third-party servicer. The IRS also claims that the third-party debt collector will also send a letter informing the taxpayer of his or her account’s transfer. The letter will identify the collector as a third party that has contracted with the IRS.

The only parties authorized to collect debts on behalf of the IRS or send communications to taxpayers are:

  • 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 your letter comes from a different debt collector and the IRS has not added additional third party contractors, it is likely that the notice your received was false or fraudulent.

Work with CPAs to settle your Tax Debts and Avoid Scams

In light of the ongoing scams and fraud surrounding tax obligations and the IRS’s inability to stop these practices, taxpayers may be understandably wary when dealing with third-parties who claim to act on the behalf of the IRS. Thus, taxpayers may be well-served by working with a tax professional who is familiar with IRS communications and therefore more likely to spot irregularities indicative of a scam.

Furthermore, working with a CPA or tax professional can help a taxpayer understand his or her full range of tax repayment and relief options. An accountant can help you set up a payment plan that is likely to be approved by the IRS. A tax professional can also help you apply for tax relief such as an offer-in-compromise. A tax professional can help you determine your “reasonable collection potential” for purposes of increasing the likelihood that your OIC request is accepted.

The accountants of the Cook CPA Group can assist with an array of tax debt concerns. To schedule a free initial consultation regarding unpaid tax debts, call our Roseville accounting firm at 916-724-1665.