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New payment option available to taxpayers in private debt collection program

Posted on January 8, 2020

If you owe back taxes and are using a private debt collection program to pay them back, the CPAs at Teipen Selanders Poynter & Ayres want you to know that a new IRS-approved payment option has been added to make it easier for those who owe to pay their tax debts.

The new direct debit program was enacted by Congress to supplement existing IRS-sponsored payment options. Taxpayers now can choose the convenient option of a preauthorized direct debit to make one payment — or a series of payments — towards their federal tax debt – even while working with a private (non-IRS) debt collection service.

Here’s how the new system works:

  • When taxpayers choose the preauthorized direct debit option, they must complete and sign a written authorization including their preferred payment schedule and bank account information.
  • Once the PCA receives the taxpayer’s authorization, it will send a confirmation letter to the IRS with the details of the preauthorized direct debit.
  • The PCA creates a check according to taxpayer’s payment schedule, made out to the U.S. Department of the Treasury. The check is securely mailed to the IRS within 24 hours.
  • The program can be changed or canceled up to one business day prior to the scheduled payment.
  • Taxpayers can still opt to use the electronic payment options available on gov/Paying Your Taxes. Payments by check should be payable to the U.S. Treasury and sent directly to the IRS (not the PCA).

The newly approved program requires the IRS to contract PCAs to collect certain outstanding tax debts. The IRS has approved just four PCAs to handle more than 1.9 million total cases representing more than $16.2 billion of IRS balances.

Scam alert

As with any payment program, there will be schemes to defraud the public. Taxpayers should be on alert for scammers and identity thieves pretending to be from a PCA:

  • If a representative of a PCA contacts you, they will state that they are from one of these collection agencies:
    • CBE,
    • Performant,
    • Pioneer or
    • ConServe
  • These agencies are the only approved agencies approved to date, and must respect the Taxpayer Bill of Rights and abide by the consumer protection provisions of the Fair Debt Collection Practices Act.
  • Whether a taxpayer selects the preauthorized direct payment option or mails a check, the IRS reminds taxpayers to be on the lookout for scam telephone calls from anyone claiming to be collecting on behalf of the IRS.
  • Taxpayers will not (by law) get unexpected phone calls demanding payment from these PCAs. Before a taxpayer is contacted, the taxpayer will receive two letters; one from the IRS and one from the PCA. Both letters will include a Taxpayer Authentication Number (TAN).
  • The TAN will be used to authenticate the PCA and to verify the identity of the taxpayer, instead of using their social security number.
  • Taxpayers are advised to safeguard their TAN as they would a social security number. Taxpayers can report a suspected phone scam or inappropriate behavior to the Treasury Inspector General for Tax Administration on their website at treasury.gov/tigta, or by calling 800-366-4484.

Do you owe the IRS back taxes? Our CPAs can help you begin to get out from under IRS debt by getting you started paying off your balance in accordance with IRS regulations — and avoiding future late fees and penalties.