Taxation & Estate Planning

IRS Debt Collection

By Darrin Mish

Your IRS Problems continue to grow if you have a tax debt.  The IRS has a program where they assign back tax cases to private collection agencies.  A select segment of taxpayers who owe back taxes will be contacted by a private collection agency.

Collection Process

•    Notification of taxpayer – If you are part of this program, you will receive Letter 3998-C (We Assigned Your Overdue Tax Account To A Private Collection Agency).  This letter will state that your account has been assigned to a private collection agency.  If you do not receive this letter and a collection agency contacts you saying they are working for the IRS, be skeptical.

•    Letter from the IRS –You will receive a letter from the IRS stating that you are part of the private collection agency program.  This letter will also give you the name of the collection agency that will be contacting you.  You will receive their phone number and an ID number.   It will provide information regarding the collection process and available options for payment.

•    Letter from the collection agency – Within 10 days you should receive a letter from the collection agency itself stating its name, phone number, and ID number.  When they contact you make sure they identify themselves with this information.

•    Options – The collection agency will be able to tell you how much you owe in back taxes and if you have filed your tax returns.  They will give you several options for payment of your back taxes.  

•    Collection of money – You will still make payments to the U.S. Treasury not to the collection agency.  Make checks out to the U.S. Treasury.  The collection agency will give you the appropriate address to mail your payment to.  No cash or checks will be submitted to the collection agency itself.

•    Contact the IRS – If you feel you have been contacted by a private collection agency that is not working for the IRS, check the IRS’s website, www.irs.gov or call the IRS for more information.  

Be aware that there is a fee for the collection agency’s services.  But the fee is paid by the IRS as a percentage of what the private debt collector actually collects.

If you do not want to be part of the private collection agency program, you can ask to have your case sent back to the IRS.  This needs to be done in writing.  

As with any IRS Problems, they continue to grow while you are trying to resolve them.  Contact our office for fast resolution of your tax debt or any other IRS Problem you may be having.  Call us today tollfree at (888) 438-6474.

Full post as published by IRS Problem Solver Blog on April 22, 2008 (boomark / email).