Private Debt Collection

IRS Definition

The IRS began a new private collection program for certain overdue federal tax debts. The new program, authorized under a federal law enacted by Congress, enables designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables.

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In 2017, the IRS began to turn over accounts it’s no longer actively working to private debt collectors. Those accounts include situations in which:

• There’s a lack of resources.
• The IRS can’t locate the taxpayer.
• One year has passed without any IRS collection activity.
• More than one-third of the 10-year statute of limitations has passed, and no IRS employee has been assigned for collection.

The IRS will send a CP40 notice to inform you that your case has been transferred to a private debt collector. The collector will also send you a letter informing you that it has received your case.

The IRS won’t transfer delinquent accounts if you are:

• Under IRS audit
• Under 18
• A victim of tax identity theft
• In currently not collectible status
• Deceased
• In a combat zone or disaster area
• Currently working with appeals
• In an installment agreement
• Appealing a case in U.S. Tax Court
• Being levied
• Waiting on a pending innocent spouse or offer in compromise application

Learn all the options you may have if you can’t pay your taxes.