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IRS offers new private tax collector payment option

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I've dealt with bill collectors over the years.

Fortunately for me, it's been on behalf of a couple of relatives who found themselves in over their heads financially. Fortunately for my family members, after much — way too much — and often contentious back and forth, we were able to come to a satisfactory resolution.

That's why I tend to share former Taxpayer Advocate Nina Olson's skepticism about the way that private collection agencies, or PCAs in tax-acronymese, interact with folks who owe taxes.

But despite my, Olson's and many others' lingering distrust of these operations, private debt collect is here to stay, at least for a while. It was Congressionally mandated, after three previously-failed attempts, and private collection agencies began getting tax delinquent cases in 2017.

Much to my surprise, it seems to be working.

Now to help increase how much money is brought in, the Internal Revenue Service has added another way to pay if your old tax bill ends up in a private tax collector's hands.

Direct debit added as way to pay past tax bill: Taxpayers now can set up a preauthorized direct debit method by which they can make a single or series of payments toward their federal tax debt.

With direct debit, the owing taxpayer gives written permission to the collection agency to authorize a payment on the tax debtor's behalf to the Treasury Department.

To establish this PCA payment method, you — and I'm using this term generally, not implying that any of the ol' blog's readers are tax debtors — complete and sign a written authorization which can be submitted to the PCA by mail or fax.

The authorization contains the payment schedule and bank account information.

Once the PCA gets that signed authorization, it will send you a confirmation letter containing the details of the preauthorized direct debit.

The PCA then will create a check according to the payment schedule made out to the U.S. Department of the Treasury. The check is securely mailed to the IRS within 24 hours.

The direct debit way to pay an old tax bill can be changed or canceled up to one business day prior to the scheduled payment.

Prior e-payment options remain: The new direct debit option supplements existing IRS-sponsored electronic payment options.

You can find details on sending in your current or overdue taxes electronically at the IRS' special payments page. But here's a quick preview of some of the more popular options:

  1. Direct Pay allows online transfers directly from your checking or savings account at no cost to you.
  2. Pay by Card lets you pay by debit or credit card. In these cases, a service fee is charged by the payment processors. (More on these vendors in a minute.)
  3. Electronic Fund Withdrawal (EFW) is an integrated e-file/e-pay option offered when you file your federal tax return electronically by using commercial tax preparation software, including via Free File, or hire a tax pro to prepare and e-file your return.
  4. Online Payment Agreements are available if you cannot pay your tax bill in full by the April filing deadline. You can apply for an online monthly installment agreement at the IRS website. Once you complete the online application, you'll receive immediate notification of whether your agreement has been approved. A user fee is charged.

Be aware and beware scammers: Finally, the IRS (and I) want to make sure that you don't fall for any scam that uses private tax debt collection as a hook.

South Park money GIF_Comedy Central via GiphyYes, private debt collectors are again calling about unpaid federal taxes.
And yes, scammers will take advantage of this to try to steal your money and identity.

These tax identity theft crooks regularly use legitimate tax law and situations to try to get your personal info and money.

When it comes to PCAs, scammers will pretend to be from one of the four companies — CBE, Performant, Pioneer or ConServe — authorized to make such collection calls to taxpayers.

Or they could make up a new PCA name that sounds like of the four real collection companies.

Either way, remember that even with private tax debt collection legitimately taking place, taxpayers will not get unexpected phone calls demanding payment.

Before being contacted about a delinquent tax bill that's been turned over to a collection agent, you will receive two letters, one from the IRS and one from the PCA.

Both letters will include a Taxpayer Authentication Number (TAN). The TAN, instead of a Social Security number, will be used to authenticate the PCA and to verify the identity of the taxpayer.

If you get a call from a suspected PCA phone scammer, report it to the Treasury Inspector General for Tax Administration (TIGTA) on its website or by calling toll-free (800) 366-4484.

You also can call the IRS directly to confirm that your case has been turned to a PCA or contact a tax professional to help you work out your overdue tax bill.

You also might find these items of interest:

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RSA

Thanks for sharing such an informative post. It was very helpful to learn about private tax collector payment options.
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