Tax Strategies & Preparation Articles

On September 7^th of this year, three private collection agencies (PCA’s) will begin collecting federal income tax debt from 12,500 taxpayers who currently owe back taxes. That number will grow to 40,000 by the end of this year.

The 2004 American Jobs Creation Act authorized the IRS to use PCA’s to help them collect uncontested claims. This will enable the IRS to focus more of their resources on more complicated cases.

IRS Commissioner Mark W. Everson said, “Redirecting relatively simple cases to private firms will permit the IRS to continue to focus its existing collection and enforcement personnel on more complex tax issues.”

The IRS is taking precautions to ensure that no taxpayer is unwittingly scammed by fraudulent collection claims. Tax professionals should be aware of IRS collection policies in order to protect their clients.

The IRS requires these PCA’s to follow strict collection polices, and the IRS will personally train and monitor the three agencies. The agencies are not allowed to subcontract their work and must abide by the same taxpayer privacy and protection laws currently upheld by IRS employees.

“Don’t be fooled by scam artists claiming to be from the IRS,” said Kevin M. Brown, IRS Commissioner of the Small Business / Self-Employed Division. “People selected for the private collection program will be notified in advance from the IRS. There are clear processes in place for this program, so don’t fall victim to fraudsters who are constantly looking for new ways to trick people.”

So what should clients expect when being contacted by IRS-authorized PCA’s? If any of your clients are part of this program they should expect the following:

1. Taxpayer notification: All taxpayers involved in this debt collection program will be notified before hearing from the private collection agency. Clients should be weary of agencies contacts them in behalf of the IRS if they have not received notification previously.
2. IRS letter: All taxpayers will receive an official letter from the IRS notifying them of their involvement in the program. The letter will also tell them the name of the private collection agency handling their case.
3. Collection letter: Following the IRS letter, taxpayers will receive a letter from the collection agency. This letter will simply inform individuals that they will be contacted by the agency shortly.
4. Money collected: Taxpayers will be asked to make all payments to the U.S. Treasury. The agency will not ask that they make payments to individuals or firms, and the agency will provide proper payment coupons and mailing addresses.
5. Verify payment credit: Call the IRS (800-829-1040) or go to IRS.gov to verify that a payment has been received and credited to an account.

The IRS is aware that taxpayers are vulnerable to fraudulent claims and scams. Education is crucial in alerting taxpayers in what to expect when involved in this program. Keep in mind that the IRS will never ask for pin numbers, access codes or passwords to their private accounts. Tax professionals should be aware of IRS collection policy and ready to consult clients involved in this process.

Find Out More On What It Takes To Be A Professional Tax Preparer.

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