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IRS announces contracts to private collection agencies

Posted on October 14, 2021

The Internal Revenue Service, famously over-worked and under-staffed, has recently selected three private-sector collection agencies for collection of overdue tax debts.

Because the Teipen CPA Group is concerned about client security, we want to be sure you know that you may be contacted by one of the following three agencies if you have unpaid tax bills:

That said, the IRS will always notify a taxpayer first before transferring their account to one of these private collection agencies (PCA). Here’s how the process works:

  • First, the IRS will send a letter to the taxpayer and their tax representative informing them that their account was assigned to a private collection agency and giving the name and contact information for that agency.
  • This mailing will include a copy of Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency (.pdf).
  • Following IRS notification, the collection agency 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 collection agency’s letter will contain information that will help taxpayers identify the tax amount owed and assure taxpayers that future collection agency calls they may receive are legitimate.

The bottom line
Private collectors must identify themselves as contractors collecting taxes on behalf of the IRS. Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act, and like IRS employees, must be courteous and must respect taxpayer rights.

Private firms are not authorized to take enforcement actions against taxpayers. Only IRS employees can take these actions, such as filing a notice of Federal Tax Lien or issuing a levy.

The IRS established the Private Debt Collection program in 2016, as authorized under federal law, and contracted with several agencies to collect certain unpaid tax debts on the government’s behalf. To learn more about the private debt collection program, visit the Private Debt Collection page on IRS.gov.

You have payment options
Private collection firms are authorized to discuss payment options, including setting up payment agreements with taxpayers. But as with cases assigned to IRS employees, any tax payment must be made directly to the IRS.

A payment should never be sent to the private firm or anyone besides the IRS or the U.S. Treasury. Checks should only be made payable to the United States Treasury. To find out more about available payment options, visit IRS.gov/Payments.

If you know you owe the IRS back taxes, don’t wait to hear from a collection agency. You can always work out an agreement with the IRS through us. We can help you contact the right department and help you negotiate the best deal possible. You may contact our team at any time, knowing we will keep your information confidential.