Understanding Private Collection of Overdue Taxes

Do you owe taxes to the IRS?

If so, it’s possible you may hear from a private collection firm regarding your debt. The IRS will sometimes assign an individual or business account to a private collection firm to assist in recovering unpaid taxes.

As a result, you may receive calls from a collection firm reminding you that your tax payments are overdue. 

But you probably heard that there are phone scammers out there who impersonate the IRS.

How can you tell the difference between a legitimate collection firm and a scammer?

When you understand the IRS’s collections process, it’s much easier to pinpoint a scam.

Is the Call from an IRS Authorized Collector?

One easy way to tell if a collection call is coming from a scammer…It is unexpected. You didn’t know you owed taxes and never received notices in the mail.

The IRS will ALWAYS contact you by mail prior to sending your account to a private collection firm. In that letter (Notice CP40), you get the name and contact information of the collection firm.

You can also expect the collection firm to send you a letter. There will be information in those letters that help you verify that the collection firm calls are real. 

Also, employees of these collection agencies must follow provisions of the Fair Debt Collection Practices Act. Debt collectors are expected to be courteous and respect your rights. Legitimate private collection agencies are not permitted to use fear tactics and threats during phone calls.

Keep this in mind…You will have plenty of advanced notice before receiving a legitimate collection call about overdue taxes. By law, you can not be threatened, harassed or intimidated during a collection call.

Paying for Overdue Taxes

Another way to detect a scammer is how you are asked to pay for your overdue taxes.

Tax payments should only be made to the IRS or US Treasury. Specific information about where to send payments will be in the letter(s) you receive from the IRS. 

You will never be asked to make payments to the collection firm or an individual. Also, you will not be asked to pay with a prepaid debit or gift card. 

Acceptable IRS payment options include:

  • IRS Direct Pay
  • Electronic Federal Tax Payment System
  • Debit or credit card
  • Check or money order
  • Pre-Authorized direct debit

If you are asked to make any payments not to the IRS or US Treasury…just hang up. It is a scam. Do not engage with the person calling or give out any personal information.

Legitimate Private Collection Calls Don’t Come as a Surprise

The IRS will turn your account over to a private collection firm only after you have unpaid taxes going back several years.  

It won’t be a surprise. You’ve probably been in contact with the IRS multiple times about this debt.  
Still have questions about private debt collection? Visit the IRS’s Private Debt Collection Frequently Asked Questions page.

Overwhelmed with Your Tax Debt?

Knowing you owe back taxes, penalty fees, and building interest charges to the IRS is not a good feeling–especially if you don’t have the means to pay the full amount.

There’s good news…In many cases, the IRS is willing to work with you to settle this debt. For example, you may be able to set up a payment plan or work out an Offer in Compromise. 

You could try doing this yourself. There are resources on the IRS’s website that can help you understand the process and take the next steps.

But if it seems like too much to handle on your own, know that there are tax relief experts experienced in dealing with the IRS. 

Stop dealing with the stress and anxiety of owing the IRS. 

The team at Kedra A. Flowers CPA PC helps individuals with tax issues find solutions to finally settle their debt. 
Schedule a phone consultation to see how we can help you restore your peace of mind and make your IRS nightmares a thing of the past.