I discussed the IRS use of private collection agencies in an earlier post. However, there has been an increase in the number of scams involving alleged collection agency contacts. So, I want to focus on this topic in more depth.
If you owe an outstanding liability to the IRS, you may receive a call allegedly from a private collection agency, The IRS has a contract with several who work delinquent tax cases on the IRS’s behalf. It is critically important that you be able to distinguish between legitimate calls from these agencies and scammers who are trying to separate you from your identity, your money, or both. These scammers obtain delinquent taxpayer information from public records such as filed federal tax liens.
The IRS Assignment of your case to a collection agency
The IRS may assign certain inactive collection cases to one of three private collection agencies. These are tax debts that IRS employees are no longer actively pursuing. This usually happens under these conditions:
- The IRS is unable to locate the taxpayer, or their personnel are focusing on higher priority cases.
- There has been no interaction with the IRS regarding the delinquent account for over a year.
- The tax debt is more than two years old and has not been worked on by an IRS employee.
The contracted agencies
The IRS currently has contracted with the following three collection agencies:
- CBE Group, Inc.
- Coast Professional, Inc.
- ConServe
How to Recognize a Legitimate Caller
The IRS will mail you its Notice CP40 advising you that they assigned your account to a private collection agency. Shortly thereafter you will receive a letter from the collection agency.
Both the IRS and the private collection agency will include a Taxpayer Authentication Number in their correspondence, which you can use to verify the legitimacy of any calls. The agency will also ask specific questions to ensure they’re speaking with the correct person. If you receive a call from someone other than the assigned agency or if the caller cannot provide the Taxpayer Authentication Number, it is likely a scam.
Provision for Payments
- This is important! Never make payments directly to an individual or the collection agency.
- Never make payment by gift cards, pre-paid debit cards, cryptocurrency, or wire transfers. Scammers typically ask for those forms of payment.
- You make your payment directly to the IRS usually by check, money order, direct debit to an account, or by an installment agreement.
Installment Agreements
Speaking about installment agreements, if you can pay off your tax debt in full (a) within seven years, or (b) before the 10-year collection expiration date, the private collection agency can assist you in setting up a payment arrangement. if the amount you can afford is insufficient to pay off your liability in full within those time frames, the agency will return your account to the IRS
There are three other scenarios where the collection agency will return your case back to the IRS for collection. Those scenarios are when you:
- wish to make an offer-in-compromise (a process where you settle your liability for less than its face value)
- need a partial payment installment agreement because you are unable to make a monthly payment sufficient to pay off what you owe in full before the statute of limitations expires
- submit a written request to work directly with the IRS instead of the collection agency
The collection agency has no enforcement authority. They cannot levy (attach) any personal assets (such as a bank account or your salary/wages) or file a federal tax lien.