The Internal Revenue Service (IRS) administers federal tax laws that all U.S citizens must comply with. Among IRS’s responsibilities include processing tax returns, administering taxpayer services, and enforcing tax laws. But if delinquent taxpayers refuse to pay their dues or back taxes, the agency has far-reaching networks to help collect these payments. However, there are times when the IRS stretches its resources too thinly. In this case, the IRS can authorize third-party private collection agencies that will take over these efforts.
What are Private Collection Agencies?
A private collection agency (PCA) is a firm that specializes in collecting overdue debts from delinquent individual taxpayers and businesses. Their primary role is to find and contact the debtor by going through multiple databases and looking for information that will allow them to send collection letters and reach out through phone calls.
Once an agent has successfully reached out to you, you may negotiate different types of payment terms to settle your tax debt. Depending on the factors surrounding your situation, you may be entitled to partial or full payment plans.
The IRS uses multiple private collection agencies to help with the handling of tax accounts promptly and efficiently. One of these IRS-designated agencies may work on your case:
- CBE Group Inc.
- Continental Service Group (ConServe)
- Coast Professional, Inc.
Facing these agencies indicates the transfer of your account to collections. However, the IRS and the collector must inform you through a written notice before an agent begins to attempt to collect on your tax liability.
Why Have I Been Assigned to a Collection Agency?
Delinquent tax accounts may sometimes be transferred to a private collection agency when the IRS lacks sufficient resources to follow through with non-paying taxpayers. The transfer can also happen if the agency experiences difficulty in locating or contacting you. Likewise, the IRS may transfer your account after a year of no interaction from you or a third-party representative.
If more than two years have passed since the date of your last assessment, the IRS may notify you about assigning your account to an authorized collection agency. Upon notification, the appointed agency will help keep you informed and provide services to help you settle your tax debt.
5 Essential Facts You Need to Know About Private Collection Agencies
Private collection agencies have the authority to help resolve issues on delinquent accounts. Nevertheless, you should know their scope and limits and what you can do about your transferred account.
What the PCA will do
- Send a contact letter before calling. Before reaching out to you, the private collection agency will send a C40 Notice to advise you regarding your unpaid tax liability assignment.
- Identify themselves as contractors authorized by the IRS. Contractors from the IRS will identify themselves as authorized tax collectors before proceeding with negotiations.
What the PCA won’t do
- Request a payment made directly to them. All payments must go through the IRS using the proper channels.
- Collect financial information. A private collection agency will never ask for personal and elaborate details regarding your financial information.
What the PCA can do
- Monitor your payment arrangements. The agency assigned to you will be responsible for monitoring your payment progress and ensuring you are settling your dues within a suitable timeframe.
- Help resolve issues with your account. Once a private collection agency sends you a CP40 notice, the firm will reach out to help you resolve problems regarding your account.
- Explain and guide you through payment options. The assigned representative will explain your payment options for you to determine which scheme can best suit your needs.
What the PCA cannot do
- Transfer your account when it is still active. The IRS will transfer only inactive accounts to a private collection agency.
- Take any enforcement action. No legal action can be taken against you by the private collection agency as a means of collecting your tax debt.
- Charge any fees. Authorized private collection agencies will never ask you to settle fees for their services.
What you can do
- Submit a request for reassignment. If you are not comfortable with your assigned private collection agency, you can submit a written request for reassignment.
- Be aware of scams. Fraudsters may pretend to be authorized private collection agencies and ask for payments wired directly to them.
- Verify with the IRS. Always seek verification from the IRS before negotiating with the assigned private collection agency.
Comply with Tax Laws
The IRS conducts multiple activities simultaneously to handle tax return processing, enforcement, and taxpayer service. In addition, the agency also conducts investigations and oversees tax exemptions for qualified individuals or businesses. With so much going on, their resources may already be stretched too thin by the time they need to collect your overdue tax payments.
When this happens, the IRS partners with an authorized private collection agency to reach out to you. The designated agency will then negotiate different ways on how you can settle your debt.
Contact the tax experts at Peace of Mind Tax Help if you need assistance with a tax problem. Our team of leading experts in tax negotiation services and mediation can help you minimize your tax liability.