The Jobs Creation Act, signed into law in 2004, permits private collection agencies to collect past due federal taxes. Although there has been opposition to the idea (for one thing, the agencies charge more for their services than it would cost IRS to hire additional employees), Congress has provided funding to get the private collections program started, whereas money for hiring and training new IRS employees is in short supply.
Three firms have been chosen: CBE Group Inc., Linebarger Goggan Blair & Sampson LLP, and Pioneer Credit Recovery Inc. The first letters have already gone out to delinquent taxpayers, and the first calls by the private agencies will be made this month.
Not surprisingly, scam artists are also getting in on the act. I have already heard from a client who received a call at work from someone claiming to be a private agent collecting taxes. This person asked for my client´s EIN and banking information. Since neither she nor her business is behind on taxes, she was immediately suspicious. She was right to be.
For readers who may owe back taxes — IRS will always send you a letter informing you that you that your account has been turned over to an outside agency. If you have not received Letter 3998-C, you can be pretty sure that anyone claiming to be an outside agent for IRS is working a scam. Outside agents will already have your EIN or social security number. They won´t need to ask.
If you have received Letter 3998-C and get a call from an outside agent, the Fair Debt Collection Practices Act gives you the right to have the agency return your account to IRS. You must make your request to the agency in writing. You will definitely want to have your account returned to IRS if there is any doubt that the account balance is wrong, or if installment payments suggested by the agent will not fit within your budget.