Private Tax Collectors to Begin Collecting for IRS: Here’s What You Need to Know About Your Rights

Taxation Word Shows Excise Levy And Duty

Written by Amy Biviano, BBB Foundation Director

The IRS announced this week that private debt collection companies will start collecting overdue tax bills in spring 2017. They’ve also released the names and contact information of the four companies awarded those contracts.

  1. CBE Group, 1309 Technology Parkway, Cedar Falls, IA 50613
  2. Conserve, 200 CrossKeys Office Park, Fairport, NY 14450
  3. Performant, 333 N Canyons Parkway, Livermore, CA 94551
  4. Pioneer, 325 Daniel Zenker Dr, Horseheads, NY 14845

Under the Fixing America’s Surface Transportation Act, passed in December 2015, the IRS is required to use third party, private collection contracts to collect long term, outstanding tax bills. Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts, and a lack of resources prevents the IRS staff from working these cases.

According to the IRS, the chosen collection companies are required to agree to respect taxpayers’ rights, including the consumer protection provisions of the Fair Debt Collection Practices Act, and to be courteous in their communications. The collection agencies are permitted to identify themselves as IRS contractors collecting taxes. While the IRS includes information about these changes on www.irs.gov, and encourages consumers to frequently check the “Tax Scams and Consumer Alerts” page on their site, there are warning signs that tax scams will continue to proliferate and likely will increase, given this significant change.

In light of the unending phone scams in which criminals impersonate the IRS and demand immediate payments of taxes, the IRS says it will do everything it can to help taxpayers avoid confusion and understand their rights and responsibilities to pay any tax due. The IRS warns taxpayers to be especially careful of scams where callers claim to be collecting on behalf of the IRS.

Since most scammers have long differed from official IRS communications in their use of phone calls and emails while the IRS has strictly communicated by letters through the postal mail, the confusion between official and potentially false information may increase dramatically with this change. No longer can a consumer count on the fact that they have been contacted by a method other than the mail as an easy check on fraudulent activity, a policy that gave consumer advocates an easy to convey message and many targeted seniors more peace of mind.

Better Business Bureau serving the Northwest offers the following precautions to keep in mind, should a consumer receive a call about a past due account:

  • You will pay the IRS directly. Private collection agencies will not ask for payment on a prepaid debit card, a practice used by current tax scammers.  Instead, tax payers will be informed about electronic payment options currently located on http://www.irs.gov/Payments. The consumer can also opt to pay a past due balance by check, but this payment should only be payable to the US Treasury and sent directly to the IRS, never the private collection agency.
  • You will still get a letter. Any collection assignment must be preceded by two separate letters alerting the taxpayer of a past due balance and the pending collection activity. This procedure more closely mirrors prior IRS policy and may avoid some scam activity, but that is not clear at this point.
  • Not everyone is affected. Accounts that will not be sent to private collection agencies include taxpayers who are: deceased, under the age of 18, military members in designated combat zones, victims of tax-related identity theft, currently under examination or audit, currently in a payment plan, classified as an innocent spouse, and those in presidentially declared disaster areas.
  • You can opt out. Consumers who do not wish to work with the assigned private collection agency to settle overdue tax accounts must submit a request in writing to the private agency directly.

The IRS also advised any taxpayer who wants to make a complaint about a private collection agency or about the behavior of a specific employee to contact the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484, online at tigta.gov or in writing to:

Treasury Inspector General for Tax Administration Hotline, PO Box 595, Ben Franklin Station, Washington DC 20044-0589.

As always, the BBB Scam Tracker and bbb.org remain reliable resources for consumer information and scam detection and reporting resources.

Amy Biviano serves as the Foundation Director for BBB serving the Northwest. Biviano is a CPA and holds an MBA in Taxation from Gonzaga University and a BA in Anthropology from Yale University. 

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