The tax deadline for April has officially passed, but what if you have an income tax debt lingering from a few years back?
If you do, you might hear about it from an unlikely source.
The Internal Revenue Service (IRS) recently announced they’ll be using private debt collectors (again) to collect on IRS debt more than two years old. Here’s what this means for you and how to spot potential scammers taking advantage of this new development.
IRS debt collection now enforced by private companies
In an effort to collect on unpaid taxes that have been delinquent for at least two years, the IRS is now using debt collection companies to help.
A new law surrounding IRS income tax debt, enacted by Congress in December 2015, is now taking effect. It “requires the IRS to use private collection agencies for the collection of outstanding inactive tax receivables.”
Essentially, if you owe any IRS income tax debt from two or more years ago, don’t be surprised if you are contacted by a debt collection company. If your unpaid income taxes are sent to collections, you’ll receive a letter from the IRS, followed by a letter from the collection company the IRS assigned to collect on your unpaid taxes. For this reason, it’s important to know the difference between legitimate IRS debt collection and a predatory tax season scam.
One of the most alarming things about this development is that many previous debt collection scams revolved around tax debt. Therefore, it’s important now more than ever to be vigilant if you’re being contacted by debt collectors.
Luckily, there is a set of rules debt collectors have to play by.
Here’s how you can tell if the agency contacting you about unpaid taxes is legitimate:
(1) The IRS debt must be at least two years old.
(2) You’ll receive a letter about the unpaid taxes first – not a cold call.
(3) You will not be asked to pay via a prepaid debit, iTunes, or gift card; you will be informed about electronic payment options via IRS.gov.
(4) Your unpaid taxes will only be sent to one debt collection company.
(5) The collection agency must abide by the IRS code.
(6) You have rights.
(7) You can settle through the Offer in Compromise program.
There are currently four companies working on behalf of IRS debt collection:
CBE Group. Address: PO Box 2217, Waterloo, IA, 50704. Phone number: 1-800-910-5837
ConServe. Address: PO Box 307, Fairport, NY, 14450. Phone number: 1-844-853-4875
Performant. Address: PO Box 9045, Pleasanton, CA, 94566. Phone number: 1-844-807-9367
Pioneer. Address: PO Box 500, Horseheads, NY, 14845. Phone number: 1-800-448-3531
There are also a variety of accounts for which affected taxpayers are not subject to this collection, as outlined by the IRS:
Taxpayers who are deceased
Anyone under the age of 18
Those in designated combat zones
Victims of tax-related identity theft
Taxpayers currently under examination, litigation, criminal investigation, or levy
Accounts subject to pending or active offers in compromise
An account subject to an installment agreement
Accounts subject to a right of appeal
Those classified as innocent spouse cases
Taxpayers in presidential declared disaster areas and requesting relief from collection
How to pay back your unpaid taxes and IRS debt
Regardless of which of the four designated collection agencies contacts you about unpaid IRS debt, the only entity you should be paying is the IRS.
You can do this electronically on the IRS website or by check. Make all checks payable to the U.S. Treasury and send them directly to the IRS. Do not send a check or electronic payment to any entity other than the IRS.
Also, just because you owe unpaid taxes doesn’t mean you don’t have rights. Here are a few taxpayers’ rights outlined in Time:
Debt collectors can’t call before 8 a.m. or after 9 p.m. unless you tell them they can.
A debt collection company can’t threaten to arrest you.
If you want to be sure you owe the money, you can ask for a validation notice.
You can also double-check any balance you owe the IRS.
If any collections agency breaks these rules, file a complaint with the Treasury Inspector General for Tax Administration. Even if you owe the money, you are not allowed to be harassed.