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IRS Outsources Collections Due to FAST Act

The IRS is owed $138 billion and private collection agencies, or PCAs, are now actively trying to collect some of it. As a part of the Fixing America’s Surface Transportation Act of 2015, or FAST Act, it is hoped $2.4 billion owed to the IRS can be collected over the next 10 years.

140,000 accounts with balances of up to $50,000 have been placed with four private firms: CBE, ConServe, Performant and Pioneer. These PCAs receive the taxpayer’s mailing address, a phone number and the balance due. They receive no other confidential financial data.

These firms earn up to 25% of their receipts. They are governed by the Fair Debt Collection Practices Act which spells out when they can call, whom they can call, and what they can and cannot say. They will not use robocalls to contact taxpayers. All phone calls are recorded and PCAs undergo quality and customer satisfaction reviews.

These companies must clearly identify themselves as working for the IRS in all communications. When the IRS issues collection Notice CP40, it identifies the PCA and provides a unique authentication code. The PCA sends a separate letter to the taxpayer confirming the assignment and code. When the PCA calls, the taxpayer provides the code’s first five digits and the PCA confirms the last five digits.

The collectors ask the taxpayer to pay the IRS in full or enter into an installment agreement of up to five years. If the taxpayer can’t do either, the PCA refers the account back to the IRS. A PCA will instruct a taxpayer to send a check made out to the U.S. Treasury directly to the IRS. A PCA has no authority to negotiate, take enforcement action, charge a user fee or accept a payment for the IRS. The taxpayer can opt out of the collection program by written notification.

If the taxpayer has a valid power of attorney is on file for the unpaid tax year(s), the IRS and PCA will contact the taxpayer’s representative instead. If the taxpayer fears the caller is an imposter the taxpayer should contact the IRS.

Only individual accounts are affected for now; business account collections begin in 2019.

See the following for more details:

www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection

www.irs.gov/pub/irs-pdf/p4518.pdf

https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text