In a move that could be confusing to seniors who are vulnerable to scams, the IRS is using private debt collection agencies to collect past-due taxes. The new program began in April 2017.
Pursuant to a law Congress passed in December 2015, the IRS may now contract with private debt collectors to collect certain debts. The private collection agencies can work on accounts where the taxpayer owes money but the IRS is no longer actively working on the account, perhaps because it is older or because the IRS does not have the resources to continue pursuing it.
Historically, scammers have posed as the IRS to target seniors and other vulnerable adults to retrieve identifying information or payment. Up until now, tax professionals have been able to reassure clients that the IRS would never harass consumers over the phone. However, under this new rule private debt collectors may contact taxpayers by phone, which may make it more difficult to determine whether a scammer is targeting the taxpayer.
There are some ways to tell if the call is legitimate. The IRS will notify taxpayers by mail if it is turning a case over to a private debt collector. In addition, the debt collector is required to send a written notice once it receives the taxpayer’s information. Agencies are also required to abide by debt collection laws, which prevent debt collectors from harassing consumers.
The IRS has contracted with four debt collection companies:
- Conserve, located in Fairport, New York
- Pioneer, located in Horseheads, New York
- Performant, located in Livermore, California
- CBE Group, located in Cedar Falls, Iowa
To avoid scams, remember that private collection agencies will only ask for payments to be made online at IRS.gov or by check. Checks should be made payable to the U.S. Treasury and sent directly to the IRS, not to the private collection agency. The collection agency will not ask for payment on a prepaid debit, iTunes or gift card.
Rep. John Lewis, D-Ga., has introduced the Taxpayer Protection Act of 2017, which would repeal the IRS’s authority to contract with private companies to collect federal tax debts.