In December 2015, Congress passed the Fixing America’s Surface Transportation (FAST) Act, and it was subsequently signed into law by President Obama.
At face value, this bill seems like a wonderful piece of legislation designed to keep our roads safe and efficient. To help pay for this $305 billion bill, however, Congress authorized the IRS to partner with private collection agencies for help collecting past-due tax debts.
The Rules of Engagement for Tax Debt Collection
According to the IRS website, the four agencies who have received the contracts to pursue these accounts must submit to the Fair Debt Collection Practices Act. This law says, among other things, that these agencies are not allowed to harass debtors, make false statements in pursuit of the debt, or even contact taxpayers who notify them in writing to cease doing so.
The IRS must inform taxpayers (or their representatives or attorneys) in writing if they are transferring the taxpayers’ accounts to one of the four agencies listed below. Following completion of the transfer, the agencies must send a second letter confirming the action. They are also required to identify themselves as contractors of the IRS and “should be courteous and respect taxpayer’s rights,” according to language in the FAST Act. (Although if these agencies definition of “courtesy” in debt collection is anything like the IRS’s, this requirement isn’t likely to help taxpayers much.)
A State of Confusion for Taxpayers
Although contracting federal obligations to independent agencies has the potential to create lots of confusion and frustration for taxpayers, the IRS claims it “will do everything it can to help taxpayers avoid confusion… particularly in light of continual phone scams.”
If this statement seems hollow to you, you’re not alone. The number and variety of tax scams in the United States has exploded in recent years, and the IRS has repeatedly instructed taxpayers to be wary of anyone except a bona fide IRS employee contacting them about their tax debts. Now, however, the IRS is doing an about-face and telling taxpayers they should feel comfortable dealing with third-party collectors.
If you do receive correspondence from anyone claiming to represent one of these agencies, be aware that they are not allowed to ask for payment via prepaid debit card, gift card, or iTunes account. Receiving any such request from someone claiming to be an authorized debt collection agent for the IRS is a major red flag.
Instead, taxpayers will always be notified about electronic payment options through IRS.gov/payyourtaxbill. In addition, the approved collection agencies will never ask you to make a check out to them directly. You should only send payment for a tax debt directly to the IRS.
In essence, the collection agency can contact you and try to collect the debt to the point of exhaustion; they’re just not allowed to actually accept any money. And if you do mistakenly send money to the agency that’s attempting to collect your debt (which is an understandable mistake, since that’s normally how debt collection works), you’ll have to void the check and re-send it to the IRS.
The Private Collection Agencies
The private collection agencies that have been selected to work on delinquent accounts for the IRS include:
P.O. Box 2217
Waterloo, IA 50704
P.O. Box 307
Fairport, NY 14450-0307
P.O. Box 9045
Pleasanton CA 94566-9045
PO Box 500
Horseheads, NY 14845
If you have an outstanding tax liability and prefer not to work with one of the above private collection agencies to resolve your debt, you can submit a request in writing to the relevant address above.
Can I Avoid Having My Tax Debt Transferred to a Third-Party Collection Agency?
There are several conditions that can prevent a taxpayer’s account from being transferred to one of these agencies. The IRS can’t transfer the account to a third-party collection agency if the taxpayer is:
- Serving in a designated combat zone
- Currently living in a presidentially-declared disaster area
- Under criminal investigation or examination
To review: if you’re dead, serving your country in hostile territory, living in constant fear and isolation, or potentially headed to prison, the IRS won’t transfer your debt to a private collection agency. Perhaps taxpayers are supposed to feel grateful they won’t have to fend off third-party collectors in a war zone, or in the afterlife.
How to File a Complaint
Despite this unfortunate legislation, you still have rights as a taxpaying American. If you feel that those rights are being infringed upon or if any of the collection agencies listed above have engaged in misconduct, you may make a complaint by calling the Treasury Inspector General for Tax Administration (TIGTA) hotline at (800) 366-4484. You can also do so online at www.tigta.gov or by writing TIGTA directly at:
Treasury Inspector General for Tax Administration Hotline:
P.O. Box 589
Ben Franklin Station
Washington, D.C. 20044-0589
S.H. Block Can Stop Harassing Phone Calls and Letters from the IRS or Third-Party Collectors
When taxpayers notify the IRS or their affiliates that they have retained legal counsel, those entities are no longer allowed to contact them. Instead, the IRS or its contracted collection agency must conduct all communications through the taxpayer’s attorney. That means the team at S.H. Block can help you put a stop to threating or harassing notices and phone calls from the IRS or third-party collection agencies today.
If you are looking for protection from the IRS and their “hired gun” collection agencies and help to resolve your tax debt once and for all, please contact S.H. Block Tax Services by calling (410) 793-1231 or completing this brief contact form. Our tax attorneys and enrolled agents have decades of experience advocating for taxpayer’s rights, and we offer free consultations at any of our conveniently-located Maryland offices. Contact us today to learn more!
The content provided here is for informational purposes only and should not be construed as legal advice on any subject. Please read our full disclaimer here.