Federal law now allows the IRS to use private debt collectors to hunt down certain delinquent accounts, typically old debts from taxpayers who have been hard to locate. If your account is transferred to collections, you’ll get notices in writing from both the IRS and the contracted collector before anyone calls.

What happens when IRS goes to collections?

Here are steps you can expect if you are sent to collections: Your tax return is filed and your tax liability is assessed. The IRS sends you a tax bill, including taxes you owe, together with penalties and interest if applicable. If you don’t pay the bill or get in touch with the IRS, they’ll send you a final bill.

Why does the IRS use private collection agencies?

However, when Congress passed the Fixing America’s Surface Transportation (FAST) Act in 2015, it authorized the IRS to use private collection agencies.[1] The idea was to generate more tax revenue to fix America’s roads by using private debt collection firms to contact taxpayers who aren’t paying their bill.

What to do about private debt collection agencies?

Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency. The IRS will continue to keep taxpayers informed about scams and provide tips for protecting themselves. The IRS encourages taxpayers to visit the Tax Scams and Consumer Alerts page for more information.

How does the IRS work with debt collectors?

These debt collectors won’t simply call people out of the blue. Taxpayers with overdue tax bills will always receive several collection notices from the IRS through the mail before their accounts are turned over to the private collectors.

Can a collection agency take your tax refund?

While a collection agency can’t take your income tax refund, there are instances when the government can. If you owe federal or state taxes from previous tax years you’ll have to fork over your refund to cover those taxes.