Background on IRS’s Private Collection Agencies

In December 2015, Congress required the IRS to hire private collection agencies (PCAs) to collect some of its inactive tax receivables. An inactive tax receivable includes, for example, a tax debt that the IRS removed from its active inventory because of a lack of resources or inability to locate the taxpayer; because a year has passed since the taxpayer or his or her representative interacted with the IRS; or because more than two years have passed since assessment and the account was not assigned for collection.

PCAs do not have the same authority to resolve taxpayers’ debts that the IRS does. For example, PCAs cannot:

• Enter into an offer in compromise;
• Offer a partial payment installment agreement;
• Place accounts into currently not collectible status due to hardship; or
• Consider claims for innocent spouse relief.

PCAs can only request that the taxpayer fully pay the liability, or alternatively, offer the taxpayer a “payment arrangement” (which is an installment agreement (IA), discussed below).

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