Tax Dictionary – Private Debt Collection

IRS Definition

The IRS began a new private collection program for certain overdue federal tax debts. The new program, authorized under a federal law enacted by Congress, enables designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables.

More from H&R Block

In 2017, the IRS began to turn over accounts it’s no longer actively working to private debt collectors. Those accounts include situations in which:

  • There’s a lack of resources.
  • The IRS can’t locate the taxpayer.
  • One year has passed without any IRS collection activity.
  • More than one-third of the 10-year statute of limitations has passed, and no IRS employee has been assigned for collection.

The IRS will send a CP40 notice to inform you that your case has been transferred to a private debt collector. The collector will also send you a letter informing you that it has received your case.

The IRS won’t transfer delinquent accounts if you are:

Learn all the options you may have if you can’t pay your taxes.

Related Topics

Related Resources

IRS Notice CP89 – Annual Installment Agreement Statement

Learn more about form CP89, why you received it, and how to handle an IRS CP89 notice with help from the tax experts at H&R Block.

Tax Dictionary – Tax Debt Settlement Options

Get the facts on the IRS tax debt settlement option called an offer in compromise (OIC). Read the IRS definition and get more insight from H&R Block.

How to Use First-Time Penalty Abatement

Get the facts from H&R Block about the widely available but little-known IRS penalty relief option called first-time penalty abatement.

IRS Notice CP06 – Supporting Documentation Requested

Learn more about form CP06, why you received it, and how to handle an IRS CP06 notice with help from the tax experts at H&R Block.