If You Owe Money to the IRS, a Private Debt Collector Can Call You
If you owe money to the IRS, be prepared for some changes. The IRS will now use private debt collectors to pay off bad federal debt, which could confuse some taxpayers. Here’s what you need to know.
The program was approved by Congress late last year and basically allows private tax collection agencies to collect unpaid tax payments on behalf of the IRS. As Consumerist points out , this raises all sorts of questions:
Will taxpayers ignore these calls because they think it is a scam? How can consumers tell the difference between a legitimate tax collector and a fraudster? What if contract debt collectors engage in misconduct, such as threats of arrest or general harassment of people ?
For its part, the IRS has acknowledged these concerns on a web page explaining the new program . Here are the basics you should know.
Not all debts will go to private collections
According to the bill, a private debt collector will only take responsibility under certain circumstances.
These agencies will only take over accounts if a few criteria are met:
- The IRS is removing debt from its active stocks due to a lack of resources or because they cannot find a taxpayer.
- More than a third of the “applicable statute of limitations” has passed and no IRS officer has been assigned to collect a debt.
- The debt was transferred for collection, but more than 365 days have passed without interaction with the taxpayer (or a third party) in order to further collect the receivable.
In addition, the IRS has listed some specific cases where they will not transfer accounts to private collectors. These cases concern taxpayers who:
- Late
- Under 18
- In designated war zones
- Victims of identity theft for tax purposes
- Currently pending, trial, criminal investigation or foreclosure
- Subject to pending or active offers in compromise
- Subject to payment by installments
- Subject to appeal
- Classified as cases of innocent spouses
- In the areas declared by the president, disasters and recourses from the collection
If you receive a call from a private agency, they should return your account to the IRS if any of these situations apply.
You will first receive a notice from the IRS
If your debt has indeed been sent for collection, the IRS will let you know. You will receive written notice of the transfer of your accounts, as well as a second separate letter confirming the transfer.
Here are the specific collection agencies they work with:
- CBE Group
- ConServe
- Executor
- Pioneer
So what about tax fraud? Be aware that the IRS will still not accidentally call you. They will first send you a notification by mail:
Even when collecting private debt, you should not receive unexpected phone calls from the IRS demanding payment. When people have to pay tax, the IRS always mails multiple collection notices before making a phone call.
That being said, they still want taxpayers to be vigilant and keep a list of specific tax scams here.
You still have protection
In addition, these private collectors must still comply with the Fair Debt Collection Practices Act . Some of these rules include:
- They cannot call you before 8 am or after 9 pm.
- They cannot call you at work if you have forbidden them.
- They cannot falsely claim that you have committed a crime.
- They cannot distort the amount of your debt.
- They cannot threaten you with harm or arrest for non-payment.
If you run into these problems with a private collector, the IRS strongly recommends that you report it to the Inspector General of the Treasury for Tax Administration (TIGTA). You can call 800-366-4484, visit the website www.tigta.gov or write to the address :
Inspector General of the Treasury for Tax Administration Hotline PO Box 589 Ben Franklin Station Washington DC 20044-0589
If it is a threat, they suggest that you contact the TIGTA investigation office in your area.