Remember those warnings about scammers posing as debt collectors for the IRS? Starting this month, some of those debt collection letters will not be a scam. The IRS authorized and hired four debt collection firms to discuss longstanding tax balances and available payment options.
In 2015, Congress authorized the use of contracted debt collectors in an effort to bring in billions in unpaid, long overdue tax obligations. Although the program has opponents, such as the IRS agents’ union and the national taxpayer advocate, Nina Olson, the plan is already in motion. To start, both the IRS and the designated debt collection firm will send letters to taxpayers with long overdue balances under $50,000.
The IRS has hired four firms: CBE Group (IA), Conserve (NY), Performant (CA), and Pioneer (NY). The IRS and these firms have already begun making contact this month, sending approximately 100 letters per week. The volume of letters will expand anywhere from 1,000 to 4,000 letters per week by the end of the summer. Each of the two letters will contain the same information regarding the amount you owe.
If you are a taxpayer who will likely be contacted through this program, odds are you know the letter will be valid. Taxpayers who have long overdue balances have received statements from the IRS in the past, noting the tax balance along with accrued penalties and interest. If you are a taxpayer who has no such balance or falls into a categorical exception, you will not receive a valid collection letter.
What if you do owe an eligible, long overdue balance? There are some signs that will help you determine whether a letter you receive is valid:
Know Your Rights
The four debt collection firms the IRS hired must oblige by the rules of the Fair Debt Collections Act. First, the collector may not call you at all hours, day or night, or at inconvenient places. Unless you agree otherwise, the collector is restricted to contact only between 8:00 am and 9:00 pm. You can stop a collector from contacting you at work by notifying them, either verbally or in writing. Second, the debt collector cannot pose as someone else, harass, threaten, or otherwise deceive you. Verify upfront who the person is, the company from which they are contacting you, and the full purpose and scope of their contact before you provide any highly sensitive information regarding payment. Of course, the debt collector may need to verify your identity before discussing the matter further, but this should not include all sensitive information related to payment at the start of the process. The debt collector is authorized to work out a payment arrangement with you, so their demeanor should be that of resolution, not bullying or pressing you to hurry up and pay.
By law, every debt collector must send you a written “validation notice” of the amount you owe. The collector must send this notice within five days after they first contact you. The notice will contain the name of the creditor (here, the IRS) and actions you may take to appeal the notice if you do not think the balance is correct.
Certain practices that are common to scammers are prohibited by valid debt collectors under this Act. The collectors may not threaten violence or harm, may not publicize your name as someone who refuses to pay, may not use obscene or profane language, or repeatedly call you by telephone to annoy you. Debt collectors are expressly prohibited from falsifying information to collect a debt. If you suspect a debt collector is lying, take precaution in how you respond. If a debt collector makes any remark as to consequence for not complying with their request, such as arrest, prison, or any legal action, this is a red flag. If you suspect the collector is a scammer, protect yourself. Verify. Cross-reference the IRS letter, your rights under the Act, the name of the company, and the manner in which the collector is interacting with you. For more information, go to www.consumer.ftc.gov.
Take Control by Initiating Payment
The longer a tax debt continues without payment, the larger the balance grows with penalties and interest along with your anxiety. You can take proactive steps to satisfy the debt under available options, based on the amount owed. Research more on available options by visiting https://www.irs.gov/uac/about-form-9465. In some instances, the IRS will accept less than your balance based on your ability to pay. To find out if you qualify, go to https://www.irs.gov/individuals/offer-in-compromise-1.
Long overdue back taxes are troubling enough. Adding debt collectors into the mix only to the confusion. Know your rights and your options. And remember, you do not have to sort through it alone. There are available resources to guide you.
If you are in the process of an offer-in-compromise with the IRS to satisfy your debt, are a victim of identity theft that has affected your taxes, have a valid legal case involving your taxes of which the IRS is aware, the tax balance was that of a minor or a deceased taxpayer, already have a payment program in place with the IRS, or reside in a national disaster area, your back taxes will not be eligible for this collection. The Philadelphia Inquirer, “IRS Restarts the Use of Private Debt Collectors”. Arvedlund, Erin. Published April 10, 2017.