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Private Debt Collection Update

By Kathy Ploch, CPA-Houston

During a recent meeting with TSCPA’s Relations with IRS Committee and other professional organizations, IRS Director of Collection Planning and Performance Analysis Bill Banowsky reported on the status of the private debt collection efforts enacted by Congress in the Fixing America’s Surface Transportation Act of 2015 (FAST Act).

The IRS implemented a controlled launch in mid-April of roughly 100 cases per week to four private firms: CBE, ConServe, Performant and Pioneer. The number of transfer cases has gradually increased and will be up to around 2,000 per week by July. The assigned private collection agency (PCA) receives the taxpayer’s mailing address, a phone number if on file and a balance due, but no other confidential financial data. At this time, only individual accounts are affected; business account collections will begin in 2019.

The IRS will issue collection Notice CP40 to the taxpayer identifying the PCA and a unique authentication code. The PCA will send a separate letter to the taxpayer confirming the assignment and code. When the PCA calls, the taxpayer will state the code’s first five digits and the PCA, the last five digits. Scams will happen – if the taxpayer fears that the caller is an imposter or does not name the firm listed on the CP40, the taxpayer can contact the IRS and be directed to the firm working the account.

The collector will ask the taxpayer to pay in full or enter into an approved payment agreement. If the taxpayer cannot do either, the PCA must refer the account back to the IRS. The PCA has no authority to negotiate, take enforcement action, charge a user fee or accept a payment on the IRS’ behalf. In addition, the taxpayer can opt out of the collection program by written notification.

If a valid Power of Attorney (POA) is on file for the unpaid tax year(s), the IRS and PCA will contact the representative instead. If the taxpayer indicates that he or she has signed a POA, the account is to be placed on hold to allow for POA processing.

These private firms keep up to 25 percent of their receipts. They are governed by consumer protection provisions of the Fair Debt Collection Practices Act and should be courteous and respect taxpayer rights. All phone calls are recorded. PCAs undergo quality and customer satisfaction reviews. However, some concerns have already surfaced about Pioneer’s call script and collection tactics. To report PCA misconduct, call the TIGTA hotline at 800-366-4484 or visit www.tigta.gov. The Taxpayer Advocate Service also has agreed to accept private collection cases.

See the following for more details:

www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection

www.irs.gov/pub/irs-pdf/p4518.pdf

https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text

https://www.accountingtoday.com/news/senators-concerned-about-irs-private-debt-collector-abuse

 

Comments

CariWestonCPA

Great job of hitting the key points of the program Kathy, this should get pushed to wider audiences!

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