IRS to Contract with Private Debt Collectors to Collect Overdue Federal Taxes
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IRS to Contract with Private Debt Collectors to Collect Overdue Federal Taxes

The collectors will have to respect taxpayer rights and abide by the Fair Debt Collection Practices Act

April 4, 2017

The IRS is planning to contract with private debt collection agencies to collect outstanding federal tax debts.

The program was authorized under the Fixing America's Surface Transportation Act in December 2015.

In order to get a contract with the IRS, the debt collectors will have to respect taxpayer rights, which includes following the consumer protection provisions of the Fair Debt Collection Practices Act.

The collectors will go to work on outstanding accounts that the IRS is no longer actively working on collecting. Many factors are involved in how the IRS decides which accounts to assign to the collectors, including older and overdue accounts or a lack of resources that prevents the IRS from working on the account.

Affected taxpayers and their representatives will receive written notice from the IRS to notify them that their accounts are being transferred to the private debt collection agencies. The agencies will then send their own letter to confirm the transfer.

The IRS will make every effort to prevent taxpayers from getting confused by the new program and to help them understand their rights and responsibilities. This is especially important given the continuous scam phone calls that consumers are receiving in which the caller pretends to be an IRS agent and demands immediate payment.

If you have outstanding taxes, remember the following facts:

  • The collection agencies will not request that you pay with a prepaid debit card.
  • You will be informed about your options for paying your taxes electronically on the Pay Your Tax Bill section of the IRS website.
  • If you pay by check, make the check out to the U.S. Treasury and send it directly to the IRS, not to the collection agency.

Accounts Not Assigned to Collection Agencies

Below are the types of accounts that the IRS will not assign to a private debt collector. These accounts involve taxpayers who are:

  • Deceased
  • Under 18 years old
  • Located/residing in designated combat zones
  • The victim of identity theft related to taxes
  • Currently under examination, litigation, criminal investigation, or levy
  • Subject to a pending or active offer in compromise
  • Subject to an installment agreement
  • Subject to a right of appeal
  • Classified as an innocent spouse
  • Located/residing in a location declared a disaster area by the president and requesting relief from collection

For more information, consumers should visit the official IRS website. To file a complaint about a debt collection agency or report misconduct by an agency employee, call the hotline for the Treasury Inspector General for Tax Administration at (800) 366-4484.