May 18, 2017

IRS calling? This time, it may be legitimate

Consumer advocates are warning taxpayers about a new program that went into effect in April which allows the Internal Revenue Service to use private debt collection agencies. Targeted taxpayers will be those who the agency has already contacted but who are still in arrears. The IRS has contracted with four companies:

Conserve - Fairport, New York 

Pioneer - Horseheads, New York  

Performant - Livermore, California

CBE Group, Iowa


The IRS has tried twice before to use private companies to go after outstanding debts, without much success. The last such effort, shut down in 2009, found that private collectors were not as successful as government employees in recovering funds. Nonetheless, legislation passed in 2015 calls for this third try.

Consumer advocates warn of several danger the new program presents to taxpayers, urging them to be vigilant. Because private collection agencies are paid on a commission basis for every dollar recouped, they have little incentive to inform delinquent taxpayers about forgiveness programs or other alternatives for which they might qualify. Heavy-handed tactics are another concern. In fact, Pioneer's parent company in 2014 was fined $97 million for misrepresentations made to students when it worked with the Department of Education to collect outstanding student loan debts (read the story here).


Now that private companies may call, life becomes that much easier for would-be scam artists to impersonate collection agencies and try to collect on a debt that doesn't even exist.

To protect yourself and your loved ones, you should keep the following points in mind:

  • If a private collection agency has been authorized to contact you, the IRS will send you a letter first, informing you of which of the four agencies will be calling. That letter will be followed by a letter from the company. Thus, if you receive a call from a private debt collector demanding payment for back taxes and you have not  received these letters, chances are the call is a fraud.

  • A legitimate private collection agency will request that you make our a check payable to the U.S. Treasury and mail it to the Internal Revenue Service - not to the company. Arrangements may be made for electronic payment, but only through the IRS official website. Requests for payment by any other method is a red flag.


  • The agency that contacts you must abide by certain rules. They may not threaten you with arrest by law enforcement for nonpayment, and they must be courteous and respectful of your rights, per the Fair Debt Collection Practices Act.


    website. Requests for payment by any othe

If you have any question as to whether you actually owe anything, call the IRS directly at 800-829-1040.


Click here for more information from the IRS on its private debt collection program.

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