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To answer the question, yes. The Internal Revenue Service began using the services of private collection agencies (PCAs) several years ago. The IRS tasks the contracting PCAs to collect (or attempt to collect) inactive tax receivables from taxpayers.
Inactive tax receivables do not cover all, or even most, tax debts. These receivables are tax debts that cannot be collected due to the IRS’s inability to find the taxpayer, to give one example. Other times, the IRS will classify a tax debt as an inactive receivable because the taxpayer’s representative has not contacted the IRS in a year or longer.
As of November 2021, three private collection agencies have authorization to collect IRS debts:
- CBE Group, Inc., located in Waterloo, Iowa;
- Coast Professional, Inc., located in Albion, New York; and
- Conserve, located in Fairport, New York.
How Do You Know the PCA is Legitimate?
Plenty of taxpayers are surprised to learn that the IRS uses PCAs. Some tax debtors dismiss a call or letter from a PCA as a scam, which is not an effective way to deal with a tax debt.
If your tax debt has been assigned to a PCA, the IRS will first send you Notice CP40 and Publication 4518. These documents contain details on the PCA assigned to your debt and information on contacting the PCA. Before calling the PCA, have your Taxpayer Authentication Number on hand. The collection agency will ask for that number to verify your identity.
Signs that your supposed PCA is illegitimate include:
- Not having contact information that matches the three authorized PCAs mentioned above;
- Experiencing unprofessional behavior from the PCA (including threats);
- Being asked to pay your tax debt through a gift card, prepaid debit card, or wire transfer; and
- Having an adjusted gross income at or less than 200 percent of the Federal Poverty Level.
How Should You Proceed if Your Tax Debt is Transferred to a PCA?
The least effective way of dealing with a PCA is to ignore its letters and calls. If you decide to engage with the PCA, understand that the PCA’s only goal is to get you to pay your taxes. Unlike the IRS, a PCA cannot authorize an installment agreement, offer-in-compromise (OIC), innocent spouse relief, or currently not collectible (CNC) status. These four relief options might be better suited for you and your financial circumstances.
The best method for resolving your tax debts is connecting with legal counsel with experience in dealing with the IRS. Weisberg Kainen Mark, PL is focused on helping taxpayers deal with stressful tax situations. Our team is dedicated to helping you achieve a brighter future. Call us at (305) 374-5544 to discuss your options.
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