The IRS is hoping that the third time’s the charm with private tax debt collection. Beginning in early 2017, private companies will be hired to pursue old, delinquent, outstanding accounts that the IRS doesn’t have time to do itself.
Private collection of IRS tax debt has been attempted twice in the past, with marginal success. The first time was in 1996 and yielded $3 million in a little over a year – with a cost of $1 million. The second attempt was from 2006 to 2009 and accumulated $98 million at a cost of $47 million. Currently 19 million people owe more than $400 billion in tax debt to the IRS.
As the IRS launches this new partnership with private collectors, there are some things you might need to know if you have delinquent tax debt.
- The names of private collection companies will be public – The IRS plans to select partners within the next couple months and publish the list of official collection companies on irs.gov. The IRS will also notify taxpayers who have been assigned to a private collector by mail.
- Private debt collectors will go after old, outstanding accounts only – These companies will pursue accounts that have more than one-third of the 10-year statute of limitations expired, have no IRS employee assigned to collect the debt, the debtor hasn’t been contacted in a year and the debtor hasn’t requested a payment alternative or relief program.
- Collectors will look for “missing” taxpayers – Part of the job of the private companies will be to track down debtors who the IRS cannot locate. They do so with respect to taxpayers’ rights, information and privacy.
- The private tax debt collectors will not have enforcement authority – Unlike the IRS, these companies will not be able to file liens or issue levies – or have them removed.
As with any issue regarding back taxes, you are entitled to seek legal representation if you have a pending case assigned to a private debt collector.