The Internal Revenue Service will employ private debt collection agencies to collect some overdue federal tax debts. The IRS will assign cases to four private collection agencies who will begin their collection efforts starting this spring.
This new collection program requires the agencies to respect taxpayers’ rights and follow the protections for consumers in the Fair Debt Collection Practices Act.
Because the collection agencies will be able to identify themselves as contractors of the IRS collecting taxes, the program will likely attract more scammers to the already effective and widespread use of phone, mail, and email tax scams.
This Alert reminds you to stay vigilant. Look out for any unexpected contacts from anyone claiming to be collecting on behalf of the IRS. And no matter what, remember that the IRS does not accept pre-paid debit cards or wire transfer payments, and all tax debts should be paid directly to the IRS and never to someone acting on its behalf.
Under the new practice, the IRS will assign private collection agencies to work on accounts where taxpayers owe money, but the IRS is no longer actively working the case.
The IRS, not the private collection agency, will give taxpayers and their representatives the first written notice that their accounts are being assigned to private collection agencies. The agencies will then separately send a second letter to the taxpayers and their representatives to confirm the transfer of the IRS accounts to that agency.
Employees of the collection agencies must follow the Fair Debt Collection Practices Act, which, among other things, means that:
Private collection agencies will not ask for payment on a pre-paid debit or credit card. Taxpayers will be informed about electronic payment options for tax debts on the IRS website.
Payments by check should always be payable to the “U.S. Treasury” and sent directly to the IRS, not the private collection agency.
Private collection agencies will return accounts to the IRS if they fall into any of ten identified situations, like the taxpayer is deceased, under the age of 18, or in a designated combat zone. A complete list of accounts that are not for private debt collection can be found on the IRS website.
Read the Michigan Attorney General’s Consumer Alert on IRS Phone and Email Tax Scams.
To make a complaint about a private collection agency or report misconduct by its employee, call the Treasury Inspector General for Tax Administration (TIGTA) hotline at 800-366-4484, visit the TIGTA website, or write to:TIGTA
The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer Alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.