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IRS Using Private Collections Services

Congress passed a law requiring the IRS to use private collection agencies (PCA). These agencies assist the IRS in collecting certain overdue tax accounts.  So, if you are approached, how to you know it is legit and not a scam?  Read on...

They will place your account with a PCA for collection of your unpaid tax liability because you met one of the following criteria:

  • They lacked the resources or couldn’t locate you
  • A year has passed and you or your third-party representative haven’t interacted with them on your account
  • More than 2 years has passed since assessment and account was not assigned for collection

They would not have assigned your account to a private collection agency if you are:

  • Deceased
  • Under 18 years of age
  • In a designated combat zone
  • The victim of tax-related identity theft
  • Recipient of supplemental security income (SSI) or social security disability insurance (SSDI)
  • Adjusted gross income does not exceed 200% of the applicable poverty level
  • Currently under examination, litigation, criminal investigation, or levy
  • Subject to pending or active offers in compromise
  • Subject to an installment agreement
  • Subject to a right of appeal
  • Classified as an innocent spouse case
  • In a presidentially declared disaster requesting relief from collection

Effective September 23, 2021, taxpayers may be contacted by the following private collection agencies (PCAs):

P.O. Box 2217
Waterloo, IA 50704
Coast Professional, Inc. 
P.O. Box 526
Albion, NY 14411
P.O. Box 307
Fairport, NY 14450

A private collection agency will:

  • Send an initial contact letter before attempting to collect
  • Identify themselves as IRS contractors who are collection taxes
  • Set up and monitor payment arrangements that will allow you to pay in full within seven years or the collection expiration date

A private collection agency will not:

  • Request a payment made directly to them or on prepaid debit, iTunes or gift cards
  • Collect financial information
  • Take any type of enforcement action such as issuing a levy or Notice of Federal Tax Lien
  • Make determinations to accept or reject offers in compromise or report accounts currently not collectible
  • Charge a fee for setting up a payment agreement

The IRS will send you a letter before you are contacted by a private collection agency (PCA). This letter is called a Notice CP40PDF. It verifies that your case was transferred to a PCA.

After they send you the Notice CP40, the PCA will send you a letter confirming assignment of your unpaid tax liability. The PCA will not contact you by telephone before sending you the confirmation. After they send that letter, the PCA will call you to help you resolve your account. They will explain the payment options and help you choose one that is best for you.  You make all payments to the IRS. The PCA will never ask you to pay them directly or through prepaid debit, iTunes or gift cards.

How can you make certain that the contact is coming from a legitimate agency and not a scammer?

Before you receive a phone call, both the IRS and the private collection agency (PCA) will send you a letter. The IRS Notice CP40 and the PCA’s initial letter contain a Taxpayer Authentication Number. The PCA uses this number to verify your identity and you can use the number to confirm the PCA’s identity. Keep both letters in a safe place for future reference.

If you do not wish to work with your assigned private collection agency to settle your overdue tax account, you must submit this request in writing to the PCA.