If you have outstanding tax receivables, the Internal Revenue Service is keeping an eye on you. The IRS recently began a new private debt collection program which allows four designated contractors (debt collectors) to collect outstanding taxes on the government’s behalf.

More about the program

The IRS has been working for a few years now on a program to effectively recoup overdue taxes owed by taxpayers (who’ve been contacted numerous times). A 2015 statute orders the agency to turn over many inactive receivables to private debt collectors, but evidently it has not been enough to recover all that is owed.

Enacted by Congress in December 2015, Section 32102 of the Fixing America’s Surface Transportation (FAST) Act requires the IRS to use private debt collection agencies to retrieve inactive tax receivables.

Is the program already underway?

It was off to a slow start mid-April; however starting in May up until now, thousands of people each week have been called by the IRS.

What is the collection process like?

The debt collectors will not simply cold call people. Taxpayers with overdue bills will receive several notices through the mail before the private collectors get a hold of their accounts. These companies must explicitly identify themselves as working for the IRS in all communications, and they are already on the lookout for scam artists posing as such individuals.

Supporters

IRS Commissioner John Koskinen said that they’re taking steps throughout this effort to ensure that the private collection firms work responsibly and most of all respect the rights of taxpayers. They have also ensured that they will not assign certain accounts to private collection agencies which involve certain types of taxpayers, including: minors, those in combat zones, victims in tax related identity theft, accounts that are subject to installment agreements or classified as an innocent spouse case.

Opponents

Some IRS employees are opposed to the idea because they expect it to bring out “harassing” behaviors from collection agents to owing individuals (some of whom may need assistance to pay). Others believe that the collectors’ main incentive is to collect money, and that they will solicit money from vulnerable taxpayers who cannot afford it.

Who are the four collection agencies?

CBE, ConServe, Performant and Pioneer Credit Recovery are the four chosen agencies. NBC News tried reaching out to all four, but was only successful in hearing from Pioneer Credit Recovery. They said that people can expect “fair treatment and quality service,” and the chosen agent will “confirm you are aware of your rights as a taxpayer under the Fair Debt Collection Practices Act and comply with debt collection rules and consumer protections.”

Scam red flags

As we’ve written about before, there are some things the real IRS will never say or do. If a private collection agency asks for payment in the form of a prepaid debit, iTunes or gift card, it is a scammer! If a private collection agency is threatening you with arrest, it is a scammer! If a private collection agency asks and pressures for immediate payment, it is a scammer!!

A legitimate private debt collector will ask you to send a check made out to the U.S. Treasury directly to the IRS. No payments should go to the debt collection agency.

If you have further concerns or questions, feel free to reach out to our Tax Services Team.