Do Private Collection Agencies Collect Tax Debt?

There are a lot of scammers that try to trick you by pretending they are from the government or working on behalf of the government. So, it is not surprising that a collection agency claiming to be collecting for the IRS would raise red flags.

However, according to the IRS, it could be legitimate because the agency does work with private collection companies to collect past due taxes.

Accounts sent to private companies

The IRS does not send every account to collections. It will not send your account to an agency if you have an installment agreement, innocent spouse relief or pending offers to reach an agreement. In addition, it will not use collections if you are under current criminal investigation or going through litigation. Those in a combat zone or in a presidential disaster zone or victims of tax fraud will also not have their accounts sent to an agency. The IRS does not send the accounts of minors to collections either.

The IRS will send your account to a private company if you have not had interaction to clear your account within the past year or they could not locate you. The IRS only uses specific collection agencies, which are in a list on the IRS website.

Verification

You have a few ways that you can verify a collection contact is legitimate. You can check your transcript from the IRS that will tell you if the account is with a private collection agency. You also should get an IRS letter telling you about the private collection action. Also, you can call the IRS to verify the collection is real.