IRS To Begin Private Debt Collection Program in Spring 2017

On September 26, 2016, the IRS announced its plans for the private collection of certain federal tax debts beginning next spring. The announcement identified the following four (4) contractors that the IRS selected to carry out these collection efforts:

  • CBE Group, 1309 Technology Pkwy, Cedar Falls, IA 50613
  • Conserve, 200 CrossKeys Office Park, Fairport, NY 14450
  • Performant, 333 N Canyons Pkwy, Livermore, CA 94551
  • Pioneer, 325 Daniel Zenker Dr, Horseheads, NY 14845

The origin of this new program can be traced back to IRC § 6306, which was enacted as part of the American Jobs Creation Act of 2004 and which provided, in general, that nothing prevented the IRS from entering into "qualified tax collection contracts" with private collection agencies to assist with the collection of delinquent federal tax debts. In December 2015, as part of the Fixing America's Surface Transportation Act (FAST Act), new IRC § 6036(c) and (d) were added.

IRC § 6036(c)(1) requires the IRS to use one or more private collection agencies for the collection of outstanding inactive tax receivables. IRC 6036(c)(2) defines an inactive tax receivable as any tax receivable if:

  • at any time after assessment, the IRS removes such receivable from the active inventory for lack of resources or inability to locate the taxpayer;
  • more than ⅓ of the period of the applicable statute of limitation has lapsed and such receivable has not been assigned for collection to any IRS employee; or
  • in the case of a receivable which has been assigned for collection, more than 365 days have passed without interaction with the taxpayer or a third party for purposes of furthering the collection of such receivable.

IRC 6036(d) provides that a tax receivable is not eligible for collection under a qualified tax collection contract if the receivable:

  • is subject to a pending or active offer-in-compromise or installment agreement;
  • is classified as an innocent spouse case;
  • involves a taxpayer identified by IRS as being (a) deceased, (b) under the age of 18, (c) in a designated combat zone, or (d) a victim of tax-related identity theft;
  • is currently under examination, litigation, criminal investigation, or levy; or
  • is currently subject to a proper exercise of a right of appeal under the IRC.

The IRS will give taxpayers and their representative written notice that the accounts are being transferred to the private collection agencies. Taxpayers and their representative will also receive a second, separate letter from the private collection agency confirming this transfer.

The IRS announcement states that private collection agencies will be able to identify themselves as IRS contractors. The IRS also states that employees of these collection agencies must follow provisions of the Fair Debt Collection Practices Act and should be courteous and respect taxpayer rights.

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