IRS to Begin Using Private Debt Collection Agencies in 2017

Posted on October 04, 2016

The IRS plans to use private debt collection agencies in early 2017.

Here are a few things you should know about this new program:

  • The IRS has begun to select private debt collection agencies and will publish the names of these agencies on the IRS’ website,
  • Congress tried twice before to require the IRS to use private debt collection agencies without success.
  • The prior efforts, in 1996 and in 2006 through 2009, failed.
  • The IRS will use private debt collection agencies to attempt to collect old accounts that the IRS is not currently going after.
  • The types of cases that private debt collection agencies will pursue include cases where at least one-third of the ten year collection statute of limitation has expired, where no IRS employee is currently assigned to collect the debt and where the IRS has not contacted the taxpayer in one year or more and is not attempting to seek relief from the IRS with a payment alternative.

In a good development, these agencies will not have enforced collection authority.  Currently, the IRS can use enforced collection action, such as levies and liens, to collect tax debt.

However, the private debt collection agencies will not have this authority.  If a taxpayer wants to make an arrangement with the IRS, such as an installment agreement, they must contact the IRS directly.

Because of the proliferation of IRS scams where fraudsters steal money from taxpayers by pretending to be the IRS, the IRS will notify a taxpayer by mail that their case has been assigned to a private debt collector.  After their case is assigned, the private debt collector will also send a letter to the taxpayer.

Although we appreciate this safeguard, we can also easily see how scammers will still try to steal money from unsuspecting taxpayers by pretending to be a private debt collection agency.

If you currently have an agreement with the IRS, your case will not be assigned to a private debt collection agency.  This provision also appears to apply to a taxpayer who has been deemed as currently uncollectible, meaning that that person has no present ability to make any payments to the IRS and the IRS has placed that individual in uncollectible status.

Do you owe money to the IRS? Are you under audit? Please contact us; we can help.

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