Private tax debt collection begins again this week
Be on guard against crooks using the effort as a tax scam hook
And so it starts. Again.
As mandated by Congress, the Internal Revenue Service has turned over some delinquent tax accounts to private debt collectors. These collection agencies will begin calling affected individuals this week.
Worried much? I am.
New tax scam potential: I spelled out my primary concern in a post last month about the private collection letter the IRS had finalized.
"If you think this opens the door -- and windows and attic vents -- wide for tax scammers, you are probably correct. And you are not alone.
I'm worried about increased scam phone calls where con artists will use private bill collecting as a hook to steal taxpayer money."
So is IRS Commissioner John Koskinen.
That's why he announced today the security measures the agency is taking in connection with this ill-advised — my words, not Koskinen's or the IRS' (at least not for publication) — private tax collection effort.
IRS scam warning: "The IRS is taking steps throughout this effort to ensure that the private collection firms work responsibly and respect taxpayer rights," said Koskinen in a statement announcing the program's start.
"The IRS also urges taxpayers to be on the lookout for scammers who might use this program as a cover to trick people. In reality, those taxpayers whose accounts are assigned as part of the private collection effort know they have a tax debt," Koskinen added.
The taxpayers whose overdue accounts have been assigned to a private collection firm have had had multiple contacts from the IRS in previous years. Essentially, the IRS decided they were more trouble than they were worth and just let them slide.
Now the debt collectors are on the taxpayers' trails.
Limited collection start: Only a few hundred taxpayers are in this first batch of private collections. The IRS says they will be receiving mailings and subsequent phone calls notifying them of the collection effort.
The private collection program will increase to thousands a week later this spring and summer.
Collection system steps: The IRS reminds folks whose tax bills are now in collection agency hands that they will always receive multiple contacts, letters and phone calls.
And the first contact will be from the IRS, not private debt collectors.
First, the IRS will send a letter to the taxpayer and, if applicable, his/her tax representative informing them that their account is being assigned to a private collection agency, or PCA.
That letter will include the name and contact information for the PCA that will handle their account. It will one of four authorized collection agencies:
- CBE Group of Cedar Falls, Iowa,
- Conserve of Fairport, New York,
- Performant of Livermore, California, and
- Pioneer of Horseheads, New York.
The IRS notification letter also will contain a copy of Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency.
Next, the PCA will send its own letter to the taxpayer and, if applicable, his/her representative confirming the account transfer.
Both the IRS letter and the one from the PCA will contain information that will help taxpayers identify the tax amount owed and assure taxpayers that future collection agency calls they may receive are legitimate.
PCA calling rules: When the private collectors call about a delinquent tax account, they will identify themselves as contractors of the IRS collecting taxes.
However, the collection agency employees must follow the provisions of the Fair Debt Collection Practices Act.
And like IRS employees, the PCA reps must be courteous and respect taxpayer rights.
Pay only the IRS: The private debt collectors are authorized to discuss payment options, including setting up payment agreements with taxpayers. But they will not be collecting the owed money.
Any tax payment must be made, either electronically or by check, to the IRS. Checks should only be made payable to the United States Treasury.
Never send a payment to the private firm or anyone other than the IRS or the U.S. Treasury.
No enforcement authority: Also, private firms are not authorized to take enforcement actions against taxpayers. If a PCA rep threatens any unilateral action, that's a flat out lie.
Only IRS employees can take action against delinquent taxpayers, such as filing a notice of Federal Tax Lien or issuing a levy.
Don't fall for PCA collection scams: You can be sure that criminals know the names of the PCAs that will be calling taxpayers. Look for scams pegged to this collection action to start popping up if they haven't already.
The IRS, as well as its Security Summit partners in the tax community and law enforcement, definitely will be watching for these schemes as the PCA program begins.
Remember, says the IRS, the PCA calls will be in connection with a tax debt that delinquent taxpayers have had and known they owed for years. They would have already been contacted long ago about the unpaid taxes.
"Here's a simple rule to keep in mind. You won't get a call from a private collection firm unless you have unpaid tax debts going back several years and you've already heard from the IRS multiple times,” Koskinen said.
However, if you get a call from someone saying they're from one of the collection agencies and you've paid your back taxes, that's a sure sign of a scam, noted Koskinen.
Check with the IRS: If you're unsure whether you have an unpaid tax debt from a previous year, which is what the private collection firms are assigned, you can go to IRS.gov and check your account balance.
If your account review indicates that your tax balance is zero, then you're up to date on your taxes and you shouldn't be hearing from the IRS or a PCA.
Expect new scams: Finally, regardless of whether you’re a taxpayer in good standing or one who still owes, you need to remain on guard against tax scammers pretending to be from the IRS or an IRS contractor.
I suspect that a fake private collection agent scheme eventually will make it onto the IRS' annual Dirty Dozen tax scam list, which is today's Daily Tax Tip.
You also might find these items of interest:
- 4 tax cyber security tips from IRS, NY tax officials
- 5 ways to protect your tax identity and refund money
- Don't fall for tax identity theft tricks, even especially if 'Revenue Officer John Koskinen' calls you