The IRS is now able to contract a private debt collection agency to force you to repay your tax debt. In this blog, we will show you how to be certain they are legitimate and how to deal with one when they announce they are coming to force you to repay your tax debt.
Why would a tax debt collection agency get in contact?
You will have had extensive dealings with the IRS before it gets to the point they take punitive action against you
Firstly, you will have failed to pay your tax on time. You will then have had correspondence from the IRS saying that you should contact them to manage your tax debt. At each stage, you should have been in contact with them as there are a variety of ways to negotiate your way out of trouble. If you are struggling with your tax debt demand it would really help to contact us to discuss your tax debt problem as soon as you get your first letter from the IRS saying you are in default with your tax.
As with any legal matters, it really helps to get legal and procedural advice from a tax attorney or CPA to discuss your way forward. In most cases, we won’t be able to stop you from paying a sizeable proportion of that tax, but we will be able to stop punitive action. It is cheaper for the IRS to negotiate than to tax punitive action, which is why it makes sense to talk to us now.
The IRS has a variety of options to forcibly take the tax debt from you including liens on property, seeing money from your bank account, and even forcing your employer to pay a monthly lump of cash from your paycheck directly to the IRS. Since late 2015 the IRS has been able to make tax debt collections through private agencies, which is a punitive action in its own right. The IRS state on their website, “Private firms aren’t authorized to take enforcement actions against taxpayers. Only IRS employees can take these actions, like issuing a levy or filing a notice of Federal Tax Lien.”
In many ways, tax debt services or tax debt collection agencies are very expensive for the IRS. While you will always pay the IRS when the private collection agency comes, the IRS will be paying $$$ for that service. This is why the taxman is always happier to talk to you direct before they have to call in the debt collectors.
Is it a scam?
Private tax debt collection agencies do not just suddenly appear! As a first step, they will send you a letter to your last known address giving you 30 days notice to respond. At this stage, you need to get help from us.
There are a lot of scammers out there but the IRS explains in a leaflet, “The letter will include the same unique taxpayer authentication number that’s on the letter sent to you from the IRS. The PCA employee will make use of the unique number for identity verification as part of the authentication process.”
In a news release IRS Commissioner John Koskinen said, “Here’s a simple rule to keep in mind. You will not receive a call from a private collection firm unless you’ve got unpaid tax debts that goes back many years and you’ve already heard from the IRS multiple times. Typically, those included in the private collection program already know they’ve got tax issues. If you get a call from someone claiming they are from one of these groups & you have paid your taxes, that is a sure sign of a scam.”
The private collection agency is hamstrung in what it can do. IRS agents can do far more by taking enforcement action against you.
The IRS even states that the best way of tackling your tax debt is by talking to them. You may need some tax resolution specialist before you make contact but at the end of the day, arresting you and taking assets costs the IRS a lot more than an agent sitting down with you and agreeing on a repayment plan. It makes sense for you and them to get to the table as soon as possible to work out a way out of your tax debt!