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The IRS Receives Help from Private Debt Collectors But Warns At the Same Time

Will private debt collection lead to confusion?

If you have debt that is more than two years old from the IRS, you should expect that you will be contacted shortly. The Internal Revenue Service (IRS) will begin working with private collection agencies to amass past due debts.  Should you owe debt more than 2 years old, you may receive a letter that your account has been selected for this program and that a private debt collector will be contacting you. This program is designed only for those taxpayers who have not paid for years and were contacted several times by the IRS.

IRS Commissioner, John Koskinen, said in a statement:”Here’s a simple rule to keep in mind. You won’t get a call from a private collection firm unless you have unpaid tax debts going back several years and you have already heard from the IRS multiple times.”

The new debt collection program, enacted by Congress last December, Section 32102 of the FAST Act requires the IRS to designate private contractors to collect outstanding inactive tax receivables on the government’s behalf.

John Koskinen, added: “The IRS is taking steps throughout this effort to ensure that the private collection firms work responsibly and respect taxpayer rights. The IRS also urges taxpayers to be on the lookout for scammers who might use this program as a cover to trick people.”

How will the new program work?

Validation notice

The IRS has designated four companies/contractors to implement the program: CBE, Perfomant, ConServe, and Pioneer. The new debt collection program says that the taxpayer will receive two letters, one from the IRS confirming that the account has been handed over to the debt collection company and the second letter will come from the designated private debt collection company. Both letters will confirm a unique taxpayer authentication number, an unpaid tax amount, and the name of the collection company assigned for the purpose. These companies must clearly state in writing that they are working on behalf of the IRS and they have been given the rights to do so.

How to know if I am dealing with the actual debt collector or a scam artist?

Here is how you can spot the scammer:

  • The IRS authorized debt collection agency will never ask you to pay them directly.
  • They will require you to send a check directly to the IRS or pay them directly at
  • Anyone who asks you to make a payment over the phone by a credit or debit card, prepaid or gift card, wiring money, or by an electronic check is a scammer-be aware of them.
  • An authorized debt collector will never use pre-recorded messages and will always speak live.
  • The true IRS private debt collection agency will always use your unique taxpayer authentication number written in the letter that you receive

Tip: If you are not sure what you owe the IRS and the collector has contacted you via a validation notice, go to the IRS official website to check your past due amount. If you owe nothing to the IRS but still receive a notice stating unpaid account balance, Know your rights, and tell the Federal Trade Commission (FTC) if you spot a problem.

Some companies have expressed their concerns with allowing private debt collectors to work on behalf of the IRS. The National Consumer Law Center staff attorney, Chi Chi Wu said: “There are so many reasons why it’s a bad idea that the IRS has been forced to use private debt collectors. They’re the most complained about the industry to the Federal Trade Commission and the Consumer Financial Protection Bureau. All too often, consumers are being mistreated by debt collectors and now taxpayers are at risk of that in the collection of tax debt.”

Wu told NBC News: “The collectors don’t have any incentive to do that because they get paid a commission for every dollar they bring in. Their main incentive is to collect money, come hell or high water. We’re concerned that some of these vulnerable taxpayers will agree to pay more than they can afford and more than they should be paying given the availability of these programs.”

To learn more about this new process, please contact United Financial Counselors at or you can also check out the details on the IRS’s site.

Protect Yourself against Scammers: to Learn More, please read: Beware Of Phone Scams: “I Have An Emergency And I Need Money”

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