Private Debt Collection
In December 2015, Congress passed the Fixing America’s Surface Transportation Act (FAST Act). Section 32102 of the act requires the IRS to use private collection agencies (PCAs) for the collection of outstanding “inactive” tax receivables. This post will talk about how the program works as well as answer some of the “concerns” people have voiced to us.
How the new program works
Typically, the accounts that are assigned to private collection are those where the unpaid tax obligations are not currently being worked by IRS collection employees and often were assessed by the tax agency several years ago. Taxpayers being assigned to a private firm would have had multiple contacts from the IRS in previous years and still have an unpaid tax bill.
First, the IRS will send you a Notice CP40 with the name of the PCA, the PCA’s toll-free telephone number, and a ten-digit Taxpayer Authentication Number (TAN). This mailing will include a copy of Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency.