In the newest NTA BLOG, National Taxpayer Advocate Erin M. Collins explains what the IRS has agreed to do for taxpayers whose payment arrangements with Private Collection Agencies (PCA) were terminated, and outlines steps the IRS needs to take to better serve taxpayers.

“I am happy to report the IRS has confirmed the steps it will take to try to get taxpayers back into

a payment arrangement that mirrors the informal agreement they entered into with the PCA,” says Collins.

As explained in Part I of the NTA Blog, approximately 17,000 taxpayers had informal payment arrangements terminated when the IRS’s contracts with two private PCAs recently expired.

Since the publishing of that blog, the IRS finalized steps to mitigate harm to taxpayers, and confirmed letters will go out to impacted taxpayers, providing them a designated phone number, staffed by IRS employees who can assist.

The letters also offer taxpayers the option to enter into an installment agreement (IA) directly with the IRS rather than a PCA, explains how to request another type of account resolution, and provides details about tax liens and penalties.

“Ideally, the IRS should have announced its plan of action for these terminated agreements prior to the expiration of the two lapsed contracts by timely informing affected taxpayers of their options,” Collins concludes. “However, albeit a little late, I welcome the IRS’s efforts to make these taxpayers whole, and I appreciate the IRS’s willingness to continue to work with my office to protect the rights of all taxpayers.”

Recommendations to Avert Problems When IRS Contracts With PCAs Expire

Additionally, Collins advocates for several internal procedures the IRS can take to lessen the burden on taxpayers when a PCA contract with the IRS expires, including:

• Ensuring that upon expiration of PCA contracts in the future, payment arrangements taxpayers entered into with the PCAs will continue uninterrupted;
• Pursuing a waiver on user fee for taxpayers who enter into IAs with the IRS after the termination of their PCA payment arrangement; and
• Not imposing levies on taxpayers with informal agreements when their accounts are returned to the IRS.

Click to read NTA Blog: Four Contracts Lapsed and Three New Ones Are in Place: What Does That Mean for Taxpayers? Part II: Help is on the Way for Taxpayers Whose Payment Arrangements With Private Collection Agencies Were Terminated for more information.

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