The IRS plans to use private debt collection agencies in early 2017.
Here are a few things you should know about this new program:
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.