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What you need to know about the IRS and collection agencies

Q. I received a notice from the IRS that I owe them for back taxes.  What should I do?

A. You need to address the debt you have with the Internal Revenue Service (IRS) by following the directions in the written notice you received from them.  If you need assistance, consider contacting a Certified Public Accountant who specializes in taxes.  Since the IRS charges interest and penalties on taxes owed, the sooner you make arrangements, the better. 

Taxpayers owe the IRS an estimated $138 billion in overdue tax payments.  As a result, the IRS recently announced that it has hired four collection agencies to collect on past due taxes. Those agencies, which include CBE Group, Conserve, Performant, and Pioneer Credit Recovery, must follow the collection provisions defined in the Fair Debt Collection Practices Act.

Not all accounts are being assigned to collection agencies.  Those not being assigned to collections include taxpayers under 18, those living in designated combat zones and victims of identity theft.  Accounts currently under examination, litigation, or criminal investigation will not be assigned to collections, either.

The rule of thumb has always been that the federal government will never call you; they will only contact you by mail. So the common wisdom has been that in order to protect yourself from scammers, you should never give your Social Security number over the phone to someone who claims to work for the government or IRS and says he or she needs to verify your identity. 

This remains true, but now that the IRS is actively using collection agencies, it’s possible that may receive a legitimate call from a collector working for the IRS. This change requires more vigilance than ever.  To protect yourself, here’s what you need to know: If you owe money to the IRS, and your account goes into collections, you should receive a letter notifying you your account is being transferred to a private collection agency.  This will go to the last known address the IRS has for you.

If you have moved several times since then, it is possible that you will not receive the notice.  If you are contacted by one of the four collection agencies, and have not received the notice from the IRS, ask the collection agency to mail you a detailed statement of the debt you owe. Tell the collection agency you will only talk to them after you receive the statement. 

You should also know that the payment for the account in collections should go directly to the IRS, not the collection agency.  If a company wants you to send money to them, don’t do it.  If you are asked to make an electronic payment, the only place to do so is at irs.gov/payments. If you do not wish to work with the assigned collection agency, you must submit your request in writing to the collection agency.  And remember, never give out your social security number by phone – the IRS already has it.

Bonnie Spain is the executive director of Consumer Credit Counseling Service of the Black Hills, a United Way member agency. For more information, email credit@cccsbh.com.

The material in this transmission is provided for personal, non-commercial, educational, and informational purposes only. ACCE makes no representations or warranties with respect to the accuracy or completeness of the contents of this transmission and assumes no responsibility for errors, inaccuracies, omissions, or any inconsistency herein. You should consult a professional where appropriate.


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