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The IRS And Private Collectors



John Stancil

After failed attempts in the past, the Internal Revenue Service has engaged the services of four private-sector collection agencies. As most people are aware, there are numerous tax-related scams in today’s world. If you are contacted by someone who states they are attempting to collect a tax debt for the IRS, you need to know what to expect and how to determine if the individual is legitimate.

What debts will the IRS turn over to the private collectors?

The IRS will assign the private collectors individual tax obligations that are not currently being worked by the IRS. So, these are old accounts that the IRS has basically given up on. This means two things to the taxpayer. One, it is a debt of which you should be aware. Two, you have been contacted in the past by the IRS about the debt. You’ve probably been contacted multiple times. Unless you have a bad memory, you should know what the collector is referring to when you are contacted.

How will I know that the debt has been turned over to the private collectors?

Initially, the IRS will send you a letter before transferring your account to a private collection agency (PCA). The letter will contain the name and contact information of the PCA that has been assigned your case.

There are four PCA’s participating in this program – CBE Group, Conserve, Performant, and Pioneer. Subsequent to the letter from the IRS, informing you of the transfer, the designated agency will send you a letter confirming the account transfer. Both the IRS and the PCA letters will contain information that will help the taxpayer identify the amounts owed and help assure the taxpayer that the letter and any subsequent phone calls are legitimate. The PCA’s will identify themselves as contractors of the IRS collecting taxes.

What acts does the PCA have authority to perform?

The private firms may discuss payment options and setting up a payment schedule. They are NOT authorized to accept any payments. All payments under the agreement should be made and sent to the IRS or the United States Treasury, either electronically or by check.  PCA’s will not demand immediate payment or ask for credit card numbers over the phone. Additionally, they will not demand immediate payment using a specific payment method such as a gift card.

The PCA’s are not authorized to take enforcement action against taxpayers. This includes notice of filing a lien or issuing a levy against the taxpayer’s property. These items can only be performed by IRS employees.  In addition, they will not threaten to bring in local police of other law enforcement agencies.

Bottom line, if you have paid your taxes and get a call from someone claiming you have an unpaid tax debt, it is more than likely a scam. If you want to verify that you have no unpaid tax debts, you can go to www.IRS.gov/balancedue. Being alert can save you from being taken by scammers. If you have a legitimate tax debt, pay it. If it is not legitimate, contact the IRS.

Dr. John Stancil (My Bald CPA) is Professor Emeritus of Accounting and Tax at Florida Southern College in Lakeland, FL. He is a CPA, CMA, and CFM and passed all exams on the first attempt. He holds a DBA from the University of Memphis and the MBA from the University of Georgia. He has maintained a CPA practice since 1979 with an emphasis in taxation. His areas of expertise include church and clergy tax issues and the foreign earned income credit. He prepares all types of returns, individual and business.

Dr. Stancil has written for the Polk County Business Journal and has presented a number of papers at academic conferences. He wrote the Instructor’s Manual for the 13th edition of Horngren’s Cost Accounting. He is published in the Global Sustainability as a Business Imperative, Green Issues and Debates, The Encyclopedia of Business in Today’s World, The Palmetto Business Review, The CPA Journal, and in the NATP TaxPro Journal. His paper, “Building Sustainability into the Tax Code” was recognized as the outstanding accounting paper at the annual meeting of the South East InfORMS. He wrote a book entitled “Tax Issues Faced by U. S. Missionary Personnel Abroad ” that will soon be published.

He has recently launched a new endeavor, Church Tax Solutions, which presents online, on demand seminars on various church and clergy tax issues.

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One comment

  1. Stupidity is doing the same thing the same way you did it before and expecting different results. IRS has engaged in this loser program twice and ended up losing money both times. IRS employees can do the same job cheaper and better but congress won’t give them the money but are willing to spend ten times more to have someone else do it.

    The National Taxpayer Advocate has reported that a large number of these accounts are for people who the IRS system would not work on because their income is less than 250% of the poverty level. If IRS worked the cases they would probably classify then as currently not collectible whereas the private collection agencies will browbeat the people for payment. If any potential client approached me with a PCA account I would tell them to write to the collection agency and tell them to only communicate by mail and please return the account to IRS.

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