Starting this month, the Internal Revenue Service will begin sending letters to a relatively small group of taxpayers whose overdue federal tax accounts are being assigned to one of four private-sector collection agencies.
The only four private groups are participating in this program are CBE Group of Cedar Falls, Iowa; Conserve of Fairport, N.Y.; Performant of Livermore, Calif.; and Pioneer of Horseheads, N.Y. The taxpayer’s account will only be assigned to one of these agencies, never to all four. No other private group is authorized to represent the IRS.
The new program—authorized under a federal law enacted by Congress in December 2015— enables these designated contractors to collect unpaid tax debts on the government’s behalf. Taxpayers being assigned to a private firm would have had multiple contacts from the IRS in previous years and still have an unpaid tax bill.
Scammers may take advantage of this change in procedure by launching a new wave of phone scams. Better Business Bureau (BBB) reminds taxpayers to be alert for scammers posing as private collection firms.
If taxpayers are unsure if they have an unpaid tax debt from a previous year – which is what the private collection firms will handle – they can go to IRS.gov and check their account balance: www.irs.gov/balancedue. If the account balance says zero, that means nothing is due, and you typically wouldn’t be getting a contact from the IRS or the private firm.
Here are a few tips to protect yourself from IRS debt collection scams:
- The IRS will never call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes, and if a case is assigned to a collection agency, both the IRS and the authorized collection agency will send the taxpayer a letter. Payment will always be to the United States Treasury.
- Most people can set up a payment agreement with the IRS online in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months. Some taxpayers may also qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.
- The private firms are authorized to discuss payment options, including setting up payment agreements with taxpayers. But as with cases assigned to IRS employees, any tax payment must be made, either electronically or by check, to the IRS. A payment should never be sent to the private firm or anyone besides the IRS or the U.S. Treasury. Checks should only be made payable to the United States Treasury. To find out more about available payment options, visit IRS.gov/Payments.
- Private firms are not authorized to take enforcement actions against taxpayers. Only IRS employees can take these actions, such as filing a notice of Federal Tax Lien or issuing a levy. To learn more about the new private debt collection program, visit the Private Debt Collection page on IRS.gov.
- The private collectors 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 like IRS employees, must be courteous and must respect taxpayer rights.
- IRS debt collections scams count on eliciting fear. It’s important to stay calm and resist the pressure to act quickly. Gather contact and company information from the caller and verify their status with the IRS.
- The IRS will never ask for credit or debit card numbers over the phone, threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying, demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
- Make a report. To report a scam or learn more about the latest scams trending in your area, go to bbb.org/scamtracker.
For more information, visit the “Tax Scams and Consumer Alerts” page on IRS.gov.
Consumers may obtain BBB Business Profiles or post Customer Reviews by going to www.bbb.org. Assistance also is available by calling 573-803-3190.