In April, the IRS began mailing letters to a small group of taxpayers whose past due tax accounts are being assigned to one of four private collection agencies. The program will expand to thousands of other taxpayers later in the spring and summer.

There are four contractors allowed to collect unpaid tax debts for the IRS. In most instances, these are unpaid individual taxes that were assessed several years ago and are not currently part of IRS collection activities.

Fraud Concerns

Both the public and some government officials have expressed a concern for potential fraud with the use of private collection agencies (“PCA”). National Taxpayer Advocate Nina Olson has already identified the use of private tax collection as one of the top problems for taxpayers. Olson believes “that the collection of federal tax debt is an inherently governmental function and should not be outsourced to private agencies.

The IRS believes it has taken extraordinary steps to reduce the possibility of fraud. The most important step is notification to the taxpayer prior to the account being transferred to a PCA. The IRS will send letters to the taxpayer and their tax representative informing them that the taxpayer’s account is being assigned to a PCA and giving the name and contact information for the PCA. This mailing will include a copy of Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency.

Who are the Private Collection Agencies?

 The four private companies participating in the program are:

  • CBE Group of Cedar Falls, Iowa;
  • Conserve of Fairport, N.Y.;
  • Performant of Livermore, Calif.;
  • Pioneer of Horseheads, N.Y.

The taxpayer’s account will only be assigned to one of these agencies, not to all four. No other private collection agency is authorized to represent the IRS.

What to Expect

A PCA is authorized to discuss payment options, including setting up payment agreements with taxpayers. A payment should never be sent to a PCA or anyone besides the IRS. Checks should only be made payable to the United States Treasury. A PCA is not authorized to take enforcement actions such as filing liens or levying bank accounts and wages.

Once the IRS letter is sent, the PCA will send its own letter to the taxpayer and their representative confirming the account transfer. To protect the taxpayer’s privacy and security, both the IRS letter and the PCA’s letter will include information that helps taxpayers identify the taxes owed, and assure taxpayers that future PCA calls they may receive are legitimate. If taxpayers are uncertain whether they have unpaid taxes from a prior year -which is only what a PCA will handle-they can go to IRS.gov and check their account balance at www. irs.gov/balancedue. If the account balance says “zero,” the taxpayer owes nothing and should not be receiving calls from a PCA.

If you do not wish to work with the assigned PCA to resolve your back taxes, you must submit a written request to the PCA.

The tax relief specialists at East Coast Tax Consulting Group can help you find the best possible resolution to your tax problems. Call us today at 561-866-7605 for professional IRS representation and avoid harassing calls from private collection firms.