This spring the Internal Revenue Service will start using private debt collection companies to assist in collecting long-term, overdue tax bills. This is a change from previous years, when only IRS agents contacted taxpayers. The IRS has placed safeguards in the process to help protect taxpayers from scammers.
Even with these precautions, taxpayers should be cautious about contacts with anyone stating they are from the IRS. Consumers should continue to be very suspicious of any phone calls, emails or other contacts they receive about owing taxes, without first receiving official letters from both the IRS and a debt collection company.
According to information from the IRS, it will give each taxpayer written notice that their account is being transferred to a private collection agency. The agency will then send a second, separate letter to the taxpayer and their representative confirming this transfer.
Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes. Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act and must be courteous and respect taxpayer rights.
Among the factors that affect the IRS assigning an account to private collection agencies include older, overdue tax accounts; plus a lack of resources that prevents the IRS staff from working these cases. This action comes from the Fixing America’s Surface Transportation Act, passed in December 2015, that states that the IRS is required to use third party, private collection contracts to collect long term, outstanding tax bills.
The IRS includes information about these changes on www.irs.gov, and encourages consumers to frequently check the “Tax Scams and Consumer Alerts” page on their site. However, whenever there is a change in any procedures, it opens opportunities for scammers to take advantage of consumer confusion and misunderstanding.
Since most scammers have long differed from official IRS communications in their use of phone calls and emails while the IRS has strictly communicated by letters through the postal mail, the confusion between official and potentially false information may increase with this change.
The Better Business Bureau offers the following precautions to keep in mind, should a consumer receive a call about a past due account:
You will pay the IRS directly. Private collection agencies will not ask for payment on a prepaid debit card, a practice used by current tax scammers. Instead, tax payers will be informed about electronic payment options currently located on http://www.irs.gov/Payments. The consumer can also opt to pay a past due balance by check, but this payment should only be payable to the US Treasury and sent directly to the IRS, never the private collection agency.
You will still get a letter. Any collection assignment must be preceded by two separate letters alerting the taxpayer of a past due balance and the pending collection activity. This procedure more closely mirrors prior IRS policy.
Not everyone is affected. Accounts that will not be sent to private collection agencies include taxpayers who are: deceased, under the age of 18, military members in designated combat zones, victims of tax-related identity theft, currently under examination or audit, currently in a payment plan, classified as an innocent spouse, and those in presidentially declared disaster areas.
You can opt out. Consumers who do not wish to work with the assigned private collection agency to settle overdue tax accounts must submit a request in writing to the private agency directly.
Taxpayers may also make complaints about a private collection agency or about the behavior of a specific employee to contact the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484, online at tigta.gov or in writing.
As always, the BBB Scam Tracker remains a reliable resource for consumer information and scam detection and reporting resources.
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