Private Debt Collectors to collect for IRS

It is now official.

The IRS has begun using 4 private debt collection agencies around the country to collect IRS Tax Debt.

Announced Sept. 26, the IRS will begin handing over collection accounts that they are no longer actively pursuing to private debt collection agencies.    This has been authorized by the “Fixing America’s Surface Transportation Act, authorized by Congress December 2015.

IRS contractors will collect outstanding inactive tax receivables.

Under Code Section 6306(c), “inactive tax receivable” means:

  1. At any time after assessment, the IRS removes the receivable from active inventory for lack of resources or inability to locate the taxpayer;

  2. More than one-third of the period of the applicable statute of limitation has lapsed and the receivable hasn’t been assigned for collection to any IRS employee; or

  3. For a receivable that has been assigned for collection, more than 365 days have passed without interaction with the taxpayer or a third party for purposes of furthering its collection.

The collection agencies will continue to be held accountable to all the requirements of the Fair Debt Collection Practices act.

According to the IRS, some key points of the new program include:

  • Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts and lack of resources preventing the IRS from working the cases.
  • The IRS will give taxpayers and their representatives a written notice that their account is being transferred to a private collection agency. The agency will then send a second, separate letter to taxpayers and their representatives confirming this transfer.
  • Private collection agencies 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 must be courteous and respect taxpayer rights,” the IRS said.

It is interesting to note that this is NOT a new experiment.  The IRS had a private debt collection program from 2006 to 2009.  The program was scrapped with the IRS saying that tax collection was best done by the IRS.

 

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