The Internal Revenue Service has chosen four private debt collection agencies to help collect unpaid tax debts as the IRS gears up to resurrect the controversial program.
The three agencies are CBE Group of Cedar Falls, Iowa, Conserve of Fairport, N.Y., Performant of Livermore, Calif., and Pioneer of Horseheads, N.Y. The IRS is required to revive the private debt collection program this year because of a provision in a highway funding bill that Congress passed last December.
Senators Charles Grassley, R-Iowa, and Charles Schumer, D-N.Y., were among the proponents of a bill to bring back the program, and it was incorporated in the highway legislation (see Here Come the Private Tax Debt Collectors … Again and the slideshow 7 Things You Need to Know about Private Tax Collectors). Three of the four agencies chosen are based in their states.
The program has been discontinued twice before because of complaints about harassment of taxpayers and the private companies’ low success rate at collecting unpaid tax debts. The increasing problem of scammers who pretend to be IRS employees and call taxpayers demanding immediate payment has also prompted concerns about reviving the program (see Highway Bill Will Revoke Passports for Tax Delinquents and Bring Back Private Tax Debt Collectors).
For the new program, the IRS said it will first send a written notice to taxpayers that it is turning over their tax debts to a collection agency. The IRS said it will send a written notice to both the taxpayer and their representative telling them the account has been turned over to a private collection agency, followed by a second letter confirming the transfer.
The private collection agencies are only supposed to work on accounts where taxpayers owe money and the IRS is no longer actively pursuing their accounts. These include older, overdue tax accounts, along with accounts where a lack of resources at the IRS prevent its employees from working on the cases.
The private collection agencies will be able to identify themselves as contractors of the IRS. However, their employees will need to follow the provisions of the Fair Debt Collection Practices Act, requiring them to be courteous and respect taxpayer rights.
The IRS said it will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, especially given the prevalence of phone scams where criminals demand tax payments be sent on prepaid debit cards and gift cards.
The IRS noted the private collection agencies are not going to request payment on a prepaid debit card. They will instead inform taxpayers about the electronic payment options available to them on IRS.gov. Tax debts can also be paid by checks made out to the U.S. Treasury and sent directly to IRS, but not the private collection agency.
The IRS said it will keep taxpayers informed about any scams and offer tips for protecting themselves on the Tax Scams and Consumer Alerts page on IRS.gov.
More information on the Private Debt Collection program is also available on the site.