The U.S. Treasury is taking measures to collect on the over $400 billion dollars worth of tax bills out there. To do this, Congress has passed a section of the Fixing America’s Surface Transportation (or FAST) Act that instructs the IRS to use private debt collectors to chase down delinquent tax debts.
With all of the warnings we’ve been receiving about scammers who claim to be from the IRS and attempt to get private information out of their victims, this will likely put taxpayers on high alert. Here are some quick facts to know, and share with clients.
- The IRS will begin this process in the beginning of 2017.
- Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases.
- The IRS will give taxpayers and their representative written notice that the accounts are being transferred to the private collection agencies. The agencies will send a second, separate letter to the taxpayer and their representative confirming this transfer.
- Private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.
For further information, please see the IRS Website Section on Private Debt Collection.