On December 4th the Fixing America’s Surface Transportation Act (“FAST Act”) into law; it requires three things:

  1. that IRS use private collection agencies,
  2. that contract priority is handed over to private collection contractors, as well as debt collection centers (on the schedule mentioned under section 3711(g) of title 31, United State Code),
  3. and that there are to be a specific two reports given on the IRS to the House Committee.

The intent of requiring the IRS to use private collection agencies is to better collect “inactive tax receivables.”  Inactive tax receivables are those taxes that are removed from the active inventory due to the lack or resources or not being able to locate the taxpayer. The IRS is expected to enter contracts and agreement for using private collection contractors within 3 months after the Act’s enactment.

The FAST Act specifies particular IRS debts that aren’t able to be placed with private agencies.  For example, pending debts, debts that are considered in innocent spouse cases, involving a taxpayer that’s either dead, a minor, in combat, or a victim of identity theft that is tax-related. IRS debts that are also exempted from being placed with a private agency are debts being examined, or a debt that is subject to a proper exercise of a right of appeal.

Earlier this year, we put the FAST  Act in our blog with the question, “What do you think about the government using private debt collection agencies.”

The verdict on that is in.  The FAST Act is now law, and private collection agencies will begin collecting past due debt for the IRS the end of first quarter 2016.

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