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What To Do When Dealing with Private Debt Collectors?

The IRS just started turning over delinquent tax debts to private debt collectors in April.

The IRS will send a letter to the taxpayer giving them the heads-up that their tax debt has been turned over to a private collection agency. This notice "CP40" is required, so any taxpayer who receives a call who didn't get a letter should be justifiably suspicious and contact the IRS. So, here's the rule: letter first!

The IRS just issued Publication 4518 which provides some information on what taxpayer should expect with the coming of the PDCs. Here is an important excerpt:

What will the private collection agency do? The private collection agency assigned to your account is working on our behalf. They will send you a letter confirming assignment of your unpaid tax liability and then contact you to resolve your account. They will explain the various payment options and help you choose one that is best for you.

How can I be sure it is the private collection agency calling me? The private collection agency will send you a letter confirming assignment of your tax account. The letter will include the same unique taxpayer authentication number that is on the letter sent to you from the IRS. As part of the authentication process the PCA employee will use the unique number for identity verification. Keep both letters in a safe place for future reference.

If you or someone you know is contacted by telephone about a tax debt, don't agree to anything before thoroughly investigating. The Low Income Taxpayer Clinic can help you with your IRS debt.

 

Disclaimer
This Blog/Webpage is made available by Legal Aid of Arkansas for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. Using this webpage does not create an attorney-client relationship between you and Legal Aid of Arkansas. The Blog/Webpage should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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