Phone calls about IRS debt: scams or new private debt collectors?
IRS phone scammers stole more than $23 million from taxpayers in just two years. The IRS has been warning taxpayers for years to be suspicious of these phone calls claiming to be the IRS collecting a tax debt.
And now, with taxpayers increasingly wary of IRS imposter phone schemes, private debt collectors could cause confusion and skepticism. Thanks to a new law, the IRS is required to start using private debt collectors for some tax debts. Taxpayers will need to be increasingly savvy to understand how to identify phone scams from these private debt collectors.
First, the IRS will notify taxpayers if a private debt collector is assigned to their case.
The IRS has selected four authorized private debt collectors and plans to begin using them in early 2017. Before starting the private collection process, the IRS and the collector will send two letters:
- First, the IRS will send a letter notifying the taxpayer that the IRS has assigned his or her case to a private debt collector.
- Second, after assignment and before contacting the taxpayer, the private debt collector will send a letter.
Second, taxpayers should still send payments directly to the IRS.
Although the tax debt has been sent to a collection agency, the taxpayer should still pay the IRS directly, either online at www.irs.gov/pay or by mailing a check written out to the U.S. Treasury and mailed to the IRS. Private debt collectors will not ask for payment on a prepaid debit card.
If taxpayers need a payment alternative, such as an installment agreement, currently not collectible status or an offer in compromise, they should contact the IRS.
Third, private debt collectors won’t have enforcement authority.
Private debt collectors won’t be able to arrest taxpayers, file liens or issue levies. Keep in mind, however, that the IRS may have already filed a tax lien on some taxpayers before the private debt collector ever calls. Collectors also won’t be able to help taxpayers get liens removed. To address enforcement actions, taxpayers or their advisors will need to contact the IRS directly.
When the phone rings in 2017 and it’s about a tax debt, taxpayers need to remain wary, but be perceptive. It may be a legitimate attempt by an IRS contractor to collect debt after the IRS sent collection notices through the mail, or it could be part of a $23 million and growing scam.
Taxpayers can report IRS impersonation scams online. If in doubt, taxpayers should hang up and call the IRS at 1-800-829-1040.
Keep in mind that an extension to file is not an extension to pay. Don't forget to pay your tax bills before the deadline to avoid delayed tax return penalties.
Millions of taxpayers are continuing to procrastinate on doing taxes and filing a late tax return.
H&R Block advises upcoming tax deadlines for victims of recent disasters. The IRS has granted late-filing relief to affected taxpayers.