Following announcements made last September, the IRS Private Debt Collection Program will begin in the spring of 2017. The program empowers specific private debt collection agencies to work on accounts where delinquent taxpayers still owe money to the IRS but the IRS is no longer actively working with the delinquent taxpayers. The four private debt collection agencies selected for this program are located in Cedar Falls, Iowa; Livermore, California; Horseheads, New York and Fairport, New York.
There are ten situations where the IRS will not assign delinquent taxpayer accounts to one of its private debt collection agencies. Some of these situations include delinquent taxpayers who are:
- Deceased, under age 18 or in designated combat zones. - Victims of tax-related identify theft. - Currently under examination, litigation, criminal investigation or levy. - Subject to pending/active offers in compromise, installment agreements or rights of appeal. - Classified as innocent spouses. - In presidentially declared disaster areas and requesting relief from collection.
To avoid confusion, the IRS will send each delinquent taxpayer a written notice that the account is being transferred to a private debt collection agency. In turn, the private debt collection agency assigned to the delinquent taxpayer’s account will send a second, separate letter to the delinquent taxpayer confirming this transfer and outlining the next steps. In addition, the private debt collection agencies must abide by the consumer protection provisions of the Fair Debt Collection Practices Act.