CCH Tax Day Report
The IRS will begin shortly its process of notifying certain taxpayers by letter that their overdue federal tax accounts are being assigned to private debt collection agencies, IRS officials told reporters at an April 4 press conference in Washington D.C. The renewed IRS program that utilizes private-sector collection agencies (PCA) is authorized under the Fixing America’s Surface Transportation (FAST) Act of 2015 (P.L. 114-94).
“Here’s a simple rule to keep in mind. You won’t get a call from a private collection firm unless you have unpaid tax debts going back several years and you’ve already heard from the IRS multiple times,” IRS Commission John Koskinen noted. “The people included in the private collection program typically already know they have a tax issue.”
The IRS expects to send out letters to taxpayers and their tax representatives regarding 400 cases over the next four weeks and intends to increase that number to 4,000 a week by this summer, IRS officials told reporters. The letters will include information about the specific PCA to which the case has been assigned. After the IRS notifies taxpayers, the assigned PCA will send a letter and call the taxpayer.
Only four private firms have been chosen for this program to work as contractors for the IRS:
(1) CBE Group of Cedar Falls, Iowa;
(2) Conserve of Fairport, N.Y.;
(3) Performant of Livermore, Calif.; and
(4) Pioneer of Horseheads, N.Y.
There are currently no other private firms authorized to represent the IRS, and payments should not be sent to any of these PCAs, the officials noted. The IRS will continue to receive any taxpayer payments made.
The IRS remains concerned about the potential scams that may arise to target taxpayers once the program is implemented, according to Service officials. The IRS will be working with the tax community and law enforcement to identify emerging scams.
“The IRS urges taxpayers to be on the lookout for scammers who might use this program as a cover to trick people. Unexpected and threatening calls out of the blue from someone saying they’re representing the IRS to collect a tax debt is a warning sign people should watch out for,” Koskinen cautioned. “If you get a call from someone saying they’re from one of these groups and you’ve paid your taxes, that’s a sure sign of a scam.”
The Service will not include a specific dollar amount of unpaid tax debt in its general criteria established for determining which cases will be sent to PCAs, IRS officials said. The Service does intend to start out with “simpler cases of less than $50,000,” however. After a preliminary period during which the new program begins, the IRS will progress to assigning more complex cases with higher amounts at issue.
While this will not be the first time the IRS has used private collection agencies, it has made some changes to better its chances of success this time around. According to IRS officials, the Service has learned the importance of taxpayer confidence that they are, in fact, dealing with a contractor of the IRS when speaking to PCAs. Certain measures have been put in place to enhance taxpayer confidence in that regard, officials said.
“If people have a problem paying their tax bill, we encourage them to reach out to us,” Koskinen noted. “We have many programs designed to help people who are having trouble meeting their tax obligations. It’s better to reach out to us sooner rather than later for help, because interest and penalties on unpaid taxes can add up quickly.”
Certain taxpayer accounts will not to be transferred to PCAs, however. Under the law, these are taxpayer accounts subject to a pending or active offer-in-compromise or installment agreement; classified as an innocent spouse case; or involving a taxpayer identified by the IRS as being deceased, under the age of 18, in a designated combat zone, or a victim of identity theft. Additionally, the IRS may not contract with private collection agencies to handle any taxpayer accounts that are currently under examination, litigation, criminal investigation, or levy; or are currently subject to a proper exercise of a right of appeal.
By Jessica Jeane, Wolters Kluwer News Staff