Things are changing in IRS collections. The IRS never cold called taxpayers. But that may change. And it opens the door for more scams.
- Federal law now allows the IRS to use private debt collectors to hunt down certain delinquent accounts, typically old debts from taxpayers who have been hard to locate.
•If your account is transferred to collections, you’ll get notices in writing from both the IRS and the contracted collector before anyone calls.
• These debt collectors must abide by rules limiting when and how they can call alleged debtors. You can also request to not work with the private agency.
• IRS debt collectors will never ask to be paid directly. Instead, they will direct you to ways that you can pay the Treasury Dept.
This drastic change in practices for the IRS raises a number of concerns. Will taxpayers disregard these calls because they think they’re a scam? How can consumers tell the difference between someone collecting a legitimate tax debt and a con artist? What if the contracted debt collectors resort to bad behavior like threats of arrest or harassment?
When will these debt collections call?
The IRS has entered into contracts with four private collection agencies — Conserve, Pioneer, Performant, and CBE Group — and the first thing you need to know is that these third-party collectors won’t be calling just anyone who owes taxes to the federal government.
These agencies will only take over accounts if several criteria are met:
1. The tax debt has been removed from the IRS’s active inventory due to a lack of resources or an inability to find the taxpayer;
2. More than one-third of the applicable limitation period has passed and no IRS employee has been assigned to collect the receivable;
3. The debt has been assigned for collection, but more than 365 days have passed without interaction with the taxpayer for purposes of furthering collection of the receivable.
In other words: If you’re short on your tax payment this April, don’t expect collectors to start blowing up your phone in May.
There are also a variety of tax accounts that the IRS will not hand over to third parties, including:
• Accounts for minors
• Taxpayers in designated combat zones
• Victims of tax-related identity theft
• Accounts that are subject to an installment agreement
• Innocent spouse cases
• People in presidentially declared disaster areas who request relief from collection.
Also very important: These collection agencies are still are required to abide by the consumer protection provisions of the Fair Debt Collection Practices Act This means they cannot call you before 8 a.m. or after 9 p.m.; they can’t contact you at work after you’ve told them not to; can’t falsely claim you’ve committed a crime; misrepresent the amount you owe; threaten you with harm or arrest for lack of payment.
Identifying Scam Calls
If you get a debt-collection call claiming to represent the IRS, there are two things to think about: How they contacted you, and what they tell you.
In addition to abiding by the rules of the Fair Debt Collection Practices Act, the collection agencies contracted out by the IRS must adhere by a timeline and certain requirements when contacting taxpayers.
Before an account is transferred to a third party, the IRS will give taxpayers written notice that their accounts are being handed over to a private collection agency. The collection company will then send a second, separate letter confirming the transfer. This is all before the calls begin.
Second, a hallmark of tax scammers is to ask victims to pay their alleged debts by purchasing prepaid cards and then call back with the cards’ codes. Another common scam involves having large amounts of money sent via wire transfer.
This will never be the case, the IRS says, even with the contracted debt collectors.
In fact, taxpayers won’t even be asked to pay the private debt collectors because only the IRS can accept payment. So if a called asks you to pay any money to them, or any else except the IRS directly, it is a scam.
Any payment by check should be payable to the U.S. Treasury and sent directly to IRS, not to the private collection agency.
Taxpayers must remain on the lookout for unexpected scam phone calls from anyone claiming to be collecting on behalf of the IRS.
“This is a persistent scam that steals millions from consumers every year,” Monica Vaca, acting associate director for the FTC’s Division of Marketing Practices, tells Consumerist. “These scammers target everyone. They are counting on you to be nervous about the call and to make a hasty payment. But beware – if a caller asks you to wire money, load up a prepaid card, or buy gift cards, you are not talking to a government agency. If you think you may owe taxes, call the IRS directly.”
Additionally, the IRS does not initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information. It also doesn’t threaten taxpayers with lawsuits, imprisonment, or other enforcement action.
Need tax relief for delinquent taxes? Call Jeffrey R. Siegel, your Kansas City Tax Attorney at (913) 735-4829 today.