Does the Irs Contract with Collection Agencies
The law requires the IRS to hire private agencies to collect certain unpaid and inactive tax debts. A provision of the Fixing America`s Surface Transportation (FAST) Act, signed into law by President Obama in December 2015, requires the IRS to use private collection agencies to collect "inactive tax debts" or tax debts that the IRS has not recovered in the past due to lack of time or resources. previously reported ACA. In 2009, the IRS terminated the previous PDC program, and the NTA, after reviewing the program`s two-year data, concluded that the IRS`s collection activities were more efficient and cost-effective than the CPAs (see the NTA`s 2013 annual report to Congress, available at www.taxpayeradvocate.irs.gov). Initial data from the new PDC program show similar results. In September 2018, TIGTA announced that the PDC program generated net revenues of $1.29 million in its first year. This amount includes $56.62 million in gross revenues and $55.33 million in costs incurred. Gross revenues represent approximately 1% of the account balances allocated to APCs (see TIGTA Rep`t No. 2018-30-052, Private Debt Collection Was Implemented For Resource Challenges; However, domestic support and taxpayer protection are limited (5 September 2018), available at www.treasury.gov). The contracts include CBE Group Inc., Coast Professional Inc. and Conserve, according to an IRS press release.
Despite the weaknesses of the PDC program, there is no legislative proposal to end it. As long as it remains, practitioners can assist PDC clients by exploring the full range of payment options, protecting non-PDC clients by alerting them to the existence of the program, and assisting the IRS by reporting violations of program procedures to TIGTA. Contributor Gerard H. Schreiber Jr., CPA, works at Schreiber & Schreiber in Metairie, La. Kristine R. Wolbach, CPA, works at Eide Bailly LLP in Spokane, Washington. Marilyn Young, CPA, Ph.D., is a professor of accounting at Belmont University in Nashville, Tennessee. Mr.
Schreiber, Ms. Wolbach and Professor Young are members of the AICPA IRS Advocacy and Relations Committee. For more information on this column, please contact thetaxadviser@aicpa.org. First, the IRS never forgives interest. The only time they would give interest would be if they had miscalculated the interest charges. When it comes to penalties, the IRS sometimes grants penalties. It depends on the situation on a case-by-case basis. However, if you owe more than two years of tax arrears, the IRS generally does not grant a penalty waiver. The IRS excludes accounts from collection from private collection agencies involving taxpayers: The original IRS notice and the PCA letter contain an authentication number. When the CPA calls, the taxpayer is asked for the first five digits of the number, and the CPA indicates the remaining digits of the number. Practitioners acting on behalf of a client go through a similar authentication process.
The PCA records calls so that the IRS can verify them. If a taxpayer or an agent of a taxpayer does not agree to the call being recorded, the appeal will end. The IRS notifies taxpayers before transferring their account to a private collection agency (CPA) and provides agency contact information and a copy of Publication 4518, What you can expect if the IRS assigns your account to a private collection agency. As of Thursday, September 23, 2021, taxpayers whose unpaid tax bills can be contacted by one of three organizations: To learn more about the private debt collection program, visit the IRS`s Private Debt Collection page. The IRS will send you a letter before you are contacted by a private debt collection agency (BCP). This letter is referred to as Notice CP40 PDF (PDF). It checks if your case has been transferred to a CPA. The IRS will inform you before sending you to a private collection agency. The IRS will first send letters asking you to pay your debts. After that, they send a letter informing them that your case will be forwarded to a private collection agency. You can call them immediately to stop the transfer or, if you do nothing, you will receive a letter from the collection agency assigned to you. A instalment payment agreement is not always accepted by the IRS.
Many people ask for installment payment agreements without putting the required data behind this request. The IRS grants a payment agreement based on your financial situation, as described in the financial documents you submit. If you owe less than $50,000 and you can repay the debt within the remaining time for collection and pay it, the IRS will accept this type of agreement without financial review. Last year, the IRS continued to see collection revenue increase under the private debt collection program, reporting that private debt collection agencies helped nearly 200,000 taxpayers who created a payment plan or paid their balances in full, ACA International previously reported. The IRS established the private debt collection program in 2016, as permitted by federal law, and contracted with several agencies to collect certain unpaid tax debts on behalf of the government. To learn more about the debt collection program, visit the Private Debt Collection page. For more information, check out the links below: However, making a reference to the IRS can be difficult. Practitioners may struggle to obtain approval from the IRS CAF Unit for their Form 2848, Power of Attorney, and Representative Statement. Many cpa taxpayers have not been required to file tax returns for several years. Taxpayers may have married, divorced or changed addresses since the last tax return filed. If the taxpayer`s name and address on Form 2848 do not match IRS records, the CAF unit will not accept the new Form 2848.
Filing an up-to-date tax return or filing a change of address form for the taxpayer with up-to-date information solves these problems. However, this process will delay the practitioner`s ability to represent the taxpayer by at least six weeks. .