For years, the IRS and law enforcement have warned taxpayers about scam artists posing as revenue agents. Imposters call and threaten whoever answers with arrest for past-due income taxes. Warnings from law enforcement tell taxpayers to hang up and report the call to the IRS and the Federal Trade Commission (FTC). However, the next time you get a call about past-due taxes, it could be legitimate.
Here’s why you might not want to hang up on a call about past-due taxes. Beginning Thursday, Sept. 23, 2021, some taxpayers with unpaid tax bills started to get calls from one of three private agencies contracted by the IRS to help with collection efforts. Four facts you need to know before you decide whether to hang up on that caller:
- The IRS always notifies taxpayers in writing multiple times before transferring their account to a private collection agency, or PCA. The IRS also sends a letter to the taxpayer informing them that their account was assigned to a PCA and giving the name and contact information for the PCA. Following IRS notification, the PCA will send its own letter to the taxpayer confirming the account transfer.
- Help with collection efforts is not new for the IRS. The program was established in 2016, as authorized under federal law. At that time, the agency contracted with several agencies to collect certain unpaid tax debts on the government’s behalf. Persistent understaffing, compounded by the pandemic, made it necessary to use private collections as an option to pursue past due income taxes.
- The three Private Debt Collection agencies contracted by the IRS are CBE Group, Inc., Coast Professional, Inc., and ConServ. All private collectors will identify themselves as contractors collecting taxes on behalf of the IRS. For taxpayer protection, collection agencies employees must follow the provisions of the Fair Debt Collection Practices Act, must be courteous, and must respect taxpayer rights.
- Private firms are not authorized to take enforcement actions against taxpayers, like IRS employees can do. The private firms are only authorized to discuss payment options with taxpayers, including setting up payment agreements. All tax payments must be made directly to the IRS, never to the private firm or anyone besides the IRS or the U.S. Treasury.
Despite warnings about scam artists posing as revenue agents, some calls about past due taxes are legitimate. The IRS recently contracted with three private collection agencies to help them out, so it might not be the IRS calling. You’ll want to remember the four facts explained above to determine if that caller is a valid tax collector or a scam artist, so you don’t hang up when you should stay on the line.