If you owe taxes going back years, don’t assume the IRS has forgotten about you just because you haven’t heard from the agency in a while.
In fact, you may soon be hearing from a private debt collector hired by the IRS to recover what’s owed Uncle Sam. The agency says starting this week it will be sending out letters to a few hundred taxpayers to let them know that their tax debt has been turned over to a private collection agency. The program is expected to grow, with as many as 4,000 taxpayers being contacted weekly by the end of summer.
“No one will hear from a private collection firm unless they have unpaid tax debts going back several years and they have already heard from the IRS multiple times about this debt,” says Mary Beth Murphy, commissioner of the IRS small business and self-employed division.
Congress authorized the use of private collectors in 2015 to recoup potentially billions in unpaid taxes – money the IRS hasn’t been able to collect despite repeated attempts.
If you’re among those with long overdue taxes, you’ll first get a letter from the IRS that your account has been turned over to one of four private companies: CBE Group, Conserve, Performant and Pioneer.
Then you’ll get a letter from the collection agency. You’ll never hear from more than one.
The debt collectors will identify themselves as IRS contractors and be able to discuss payment options.
But if you are seriously in arrears on taxes, don’t wait to hear from a debt collector. The longer you delay, the more you’ll owe in interest and penalties.
You have a few options. For instance, if you owe less than $50,000 in taxes and penalties, you can apply online for a monthly payment plan for up to 72 months. Or if you prefer paper, you can download Form 9465 at IRS.gov and mail it in to request a payment plan.
In some cases, the IRS will accept less than what you owe. This is known as an “offer in compromise.” Before granting this, the IRS will assess your ability to pay. To see if you’re eligible, check out the online Offer in Compromise Pre-Qualifier tool.
The IRS hired private collectors twice before. The program was discontinued the last time after three years in 2009 when the IRS concluded its own staff could do the job better.
This latest debt collection program comes at a time that the agency has been battling fraudsters impersonating IRS agents.
Fraud experts worry this private debt collection will give scammers a new angle for deceiving taxpayers.
This isn’t lost on the IRS.
“The IRS remains extremely concerned about the many con artists out there who masquerade as IRS employees or contractors,” Murphy says. “We urge everyone to be on the lookout for scammers who might use this program as a cover to swindle taxpayers.”
So, if you’re current on your taxes and you get a call out of the blue demanding payment on an IRS bill, “that’s a sure sign of a scam,” Murphy says.
And if you do owe back taxes and are contacted by a debt collector, be aware that any payments you make should be made directly to the IRS. Checks, for instance, must be made out to the U.S. Treasury. And private collectors also can’t take enforcement actions against consumers.
Discounts & Benefits
Next ArticleRead This