Private Debt Collection

Private debt collection agencies work closely with the IRS if you have outstanding, unpaid taxes. The IRS may send your bills to a third-party collection agency to handle the communication and settlement for bills.

Of course, this is something that we all want to avoid. It is not always possible for folks to catch their bills before they are sent to collections, though. That is why it’s good to work with a Tax Professional so you can always stay on top of your payments to avoid bigger issues.

What happens if the IRS sends me to Private Debt Collection agencies?

If you have outstanding taxes that have not been paid for a long time, the IRS will send your bill for a third-party agency to handle.

How does private debt collection work?

Before you are contacted by a private debt collector, you will receive two letters from the IRS.

  1. The IRS will first send Notice CP40and Publication 4518. These let you know that your overdue tax account was assigned to a private collection agency.
  2. The private collection agency then sends their initial contact letter. It has information on how to resolve your overdue taxes.

These letters will contain your Taxpayer Authentication Number or Taxpayer ID. This is used to confirm your identity, keep it in a safe place so you have it available when you need it.

What Private Debt Collection agencies will contact me?

If you have outstanding debt with the IRS that was sent to collections, you will be contacted by one of the three agencies listed below on the government’s behalf:

What to expect when I am contact by a Private Debt Collection agency?

  1. You should validate that the caller is representing one of the private collection agencies listed above.
  2. The private collection agency will ask you a series of questions to make sure they’re talking to the correct person.
  3. You will be asked to exchange portions of the Taxpayer Authentication Number with the private collection agency to validate each other’s identity.
  4. The private collection agency will be courteous, professional and respect your taxpayer rights, while following the laws.
  5. The private collection agency will work with you to resolve your overdue taxes. They will NOT threaten you. If you feel the private collection agency acted inappropriately, here’s how to report it.

For more information you can also view the IRS video Private Collection of Overdue Taxes.

Private Debt Collection FAQ


Why would my account be assigned to a private debt collector?

Congress passed a law the requires the IRS to use private collection agencies. Your account has been assigned if you meet one of the following criteria:

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

What if I have already paid my balance?

Work with the PCA to determine why your payment wasn’t applied to your account. Provide the payment information the employee requests. We use the information you provide to make sure your payment is properly credited.

What are my options for paying off debt with a private collection agency?

Make all payments to the IRS. The private agency will never ask you to pay them directly or through prepaid debit, iTunes or gift cards. The private collection agency can provide information on ways to pay or you can visit Payments for electronic payment options. You can also see Publication 594, The IRS Collection Process PDF, for ways to pay your taxes.

Payment options include:

  • IRS Direct Pay to pay an individual tax bill directly from a checking or savings account at no cost
  • Electronic Federal Tax Payment System to pay federal taxes online or by phone for free
  • Debit or credit card using an electronic payment service provider for a fee
  • Check or money order, made payable to the United States Treasury. Write your name, Social Security number, and tax year on your payment
  • Preauthorized Direct Debit, a convenient and secure option that requires your written permission to authorize the PCA to draft a check, or a series of checks, on your behalf. The checks are always made payable to the United States Treasury and can be changed or canceled up to one business day prior to the scheduled payment. Ask your PCA how you can authorize the direct debit option to conveniently and securely schedule one or multiple payments

If you need assistance with your tax debt, a skilled Tax Professional from Tax Network USA is one call away. Call us at 1 (855) 225-1040 or fill out a contact form here and we will contact you ASAP.


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About The Author


Senior Tax Analyst at Tax Network USA

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