A new five-year infrastructure bill was signed by the Obama Administration in early December. While the act is committed to creating more long-terms projects in the way of highway and transit spending, it also included a clause that enables private tax collectors to work for the IRS. Under the Fast Act, the IRS is required to use these types of agencies, making the process of gathering taxpayer dollars very different from the way it once was.
A history of private debt collection
This isn’t the first time the IRS has introduced a program like this one. The 2004 American Jobs Creation Act allowed the IRS to contract out collection of past due taxes to private collection agencies (PCAs). PCAs were assigned taxpayer cases starting in 2006, but the program was eliminated in 2009 especially due to the limited authority these collectors had relating to strictly governmental actions, including negotiating taxpayer liabilities.
The new normal
Now that the Fast Act has been introduced, people should be familiar with the practices that are considered acceptable through the relationship between the IRS and PCAs. The first interaction between collector and taxpayer will come via letter. If the address listed is incorrect, the PCA will search for the new location, otherwise the agency will reach out with a phone call, according to Forbes. Although PCAs have the ability to offer a five-year installment deal to taxpayers who cannot pay in full right away, these organizations are not permitted to accept payments.
“Taxpayers should be aware of common signs of IRS imposters requesting money.”
Be mindful of fraudulent situations
With PCAs entering the fray for the IRS, there are more opportunities for taxpayers to be tricked into counterfeit interactions. To avoid providing IRS impersonators with personal or financial information, citizens should be aware of some typical practices these fraudulent collectors will use.
Every taxpayer in the program will be notified prior to be contacted by a PCA. Therefore, people should be wary of collectors asking for money if they have not been previously informed of their participation in the IRS initiative. Furthermore, these individuals will receive a letter from the IRS along with the name of the PCA who will later be reaching out regarding the taxes. A collection letter from the PCA will also be sent giving the taxpayer notice of future contact. Lastly, all back taxes will still be paid to the U.S. Treasury. Any collectors asking taxpayers to write a check to individuals or firms are likely scammers, according to the IRS.
Taxpayers should be aware of any suspicious behavior that concern payments of back taxes gathered by PCAs on behalf of the IRS. People should be sure to contact the IRS with any doubts. They could also work with a third-party tax management provider to ensure their taxes are taken care of in a timely manner to avoid IRS PCAs at all costs.