The IRS typically encourages prompt payment of outstanding taxes by assessing exorbitant late fees and interest. Many taxpayers, however, are as eager to ignore these fines as they are to keep standard tax payments at arm’s length. If, despite repeated efforts, the IRS is unable to secure payment, it may resort to alternative options — including the use of private debt collection services.
When Does the IRS Turn to Private Debt Collection?
The current relationship with the IRS and private collection services was established through the Fixing America’s Surface Transportation Act in 2015. Although this law authorizes the IRS to seek collection assistance from private services, it also extends noteworthy rights to taxpayers, including the strict enforcement of confidentiality requirements. Ostensibly, private collectors are held to the same standards of service as the IRS. If anecdotes from displeased taxpayers are any indication, however, your mileage may vary.
How Does IRS-Prompted Private Debt Collection Work?
If the IRS opts to collect on tax debt with help from an approved private service, you will receive Notice CP40 and Publication 4518. These alert you to the involvement of private collection services while also highlighting your rights as a taxpayer.
After you’ve been contacted by the IRS, you will receive an initial letter from the collection service assigned to your account. This will detail your options for resolving your debt.
If your account enters the private collection process, you should receive Taxpayer Authentication Numbers with all correspondence from the IRS and approved collection services. This number is critical for verifying that such services are legitimate.
While private services are technically barred from using aggressive tactics to collect on your tax debt, it’s still in your best interest to seek professional representation. Don’t hesitate to look to the Highland Tax Group for assistance. Contact us to learn more about your options for bringing this ordeal to a swift close.