The Internal Revenue Service recently announced that it will be working with four private collection agencies for certain overdue federal debts. This new program was authorized under an infrastructure spending bill that was signed by President Obama in December of 2015. The bill is called Fixing America’s Surface Transportation Act, the “FAST Act”.
This is the third time in 18 years that the IRS has contracted private collection agencies to help recoup funds owed to the US Treasury.
Click here to see a list of agencies that have been selected to collect on behalf of the IRS.
The IRS requires that these agencies respect the taxpayer’s rights and abide by the provisions of the Fair Debt Collection Practices Act. These private agencies will work on accounts that owe the IRS money, but the IRS is not actively working the account.
Here are some reasons that require the IRS to use a private collector:
- The tax bill is not actively being collected due to lack of IRS’ resources
- The IRS is not able to locate the taxpayer
- More than 1/3 statue of limitations has expired, and no IRS employee has been assigned to the account
- The tax bill has been assigned for collection, but more than a year has passed without any interaction
Tax bills cannot go to a private collector if:
- There is a pending or active offer-in-compromise or installment agreement
- It is an innocent spouse case
- The taxpayer is deceased, under age 18, in a designated combat zone, or is a victim of identity theft
- The taxpayer is under IRS audit, in litigation, criminal investigation, or levy
- The taxpayer has gone to IRS Appeals
The IRS will work to avoid confusion with taxpayers who have outstanding tax bills. This is especially important in light of recent phone scams that have been occurring. The IRS will send a letter to the taxpayer advising them that their case has been handed over to a private collector. The private collector will then follow up with a letter of their own before they start contacting the customer by telephone.
The collector will never ask for payment to be sent directly to them and will always advise that they payment be sent to the US Treasury. Taxpayers will be informed about electronic payment options for taxpayers online via IRS.gov/Payments.
Payments by check should be payable to the US Treasury and sent directly to IRS, not the private collection agency.
For more information visit the Private Debt Collection page on IRS.gov.