It can seem like a harrowing proposition to face IRS collection action. Notices in the mail, requesting immediate payment for a delinquent tax bill, can be inherently unnerving - especially when you're not aware that a problem exists. These letters are, of course, typically only the beginning of a series of measures you face when a tax debt is left unaddressed.
A new facet of the collection process, effective January 2016, involves private collection companies contacting you to resolve your debt. Depending on your circumstances, you may expect third-party correspondence when the IRS is unable to collect what you owe. There are also conditions which would prevent this course of action from applying to you. Before you disregard your IRS notice or opt for the path of procrastination, consider how updated collection methods may affect to your situation.
In certain instances, the IRS is now required to enlist private collectors. If the IRS is unable to collect your debt due to a lack of resources or failure to find you, your case will be forwarded to a third-party collection agency. Similarly, if your tax debt is one-third of the way to reaching the expiration threshold, you can face private collections. Finally, if your case with the IRS is still active, but more than 365 days have passed since your last interaction, you can expect to be contacted by a third-party agency.
Just like the IRS, private collectors will begin by sending you notices through the mail. In the event that your address is not current, the collection agent will attempt to track down your present location. Ultimately, you may expect to receive a phone call regarding your tax debt.
Resolutions and Payments
The collection agent assigned to your case will request that you pay your liability in full, or present you with the option of making installment payments for a period of up to five years. In the event that you can't afford even an installment plan, the agent will request supporting financial documentation to propose an alternate resolution path. It's important to note that these collection agents cannot take payments; you may request instructions on how to satisfy your balance using your preferred method of payment.
There are some instances where the IRS is not permitted to use independent collection agents. Some conditions which would prevent your case from moving into third-party hands: you've submitted an Innocent Spouse request, you are under 18 years of age, you have submitted a request for an Installment Agreement or Offer in Compromise, or you are contesting your tax debt. IRS audits and criminal investigations would also negate the use of a private collector.
Tax scams have been on the rise in recent years and, given the new private collector policy, it's entirely possible that fraudsters will attempt to exploit this for their own ends. Remember, authorized collectors do not have the ability to accept payments. While you may be asked to satisfy your balance, you should not be threatened or intimidated as part of a legitimate collection request. If you suspect that the individual contacting you is not a valid agent, you can contact the IRS directly to discuss the issue.
Regardless of your tax concern, you are still empowered to resolve the issue on your own, or with the assistance of a licensed tax professional. It may be to your advantage to consult with a tax resolution company, one which will provide you with an objective proposal to affordably handle your tax debt. There should never be an occasion when you're forced to satisfy your tax bill if it compromises your basic standard of living.
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