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Private collectors are coming for tax debts. What you should know

It’s not particularly common for taxpayers to think about their tax bill (or their tax refund, for that matter) in late September. However, the Internal Revenue Service is. In fact, the federal government is poised to start collecting on old tax bills, and it is in the process of employing private collection firms to go after them.

According to a recent report, the reliance upon private collectors is part of a highway transportation bill (the FAST Act) where funding for a number of projects will come from uncollected taxes. Also, this is not the first time the IRS has employed private collection firms. The first was in 1996, and the other was between 2006 and 2009. Each endeavor has reaped additional benefits, which is the government is ostensibly looking forward to next year’s collection activities.

In the meantime, there are a number things taxpayers should know. This post will highlight a couple.

Not all taxpayers will be affected – The private debt collectors will only pursue taxes that the IRS won’t touch. They include accounts where at least one-third of the collection period has expired; where no IRS agent is assigned, and where the IRS has not contacted the taxpayer for more than one year.

No liens or levies will be established – Also, the private collectors will not have the authority to establish liens or levies to collect back taxes. Only the IRS will have those powers. In the same vein, collectors will not be able to remove liens established to collect taxes.

If you have additional questions about the powers of private debt collectors, an experienced tax law attorney can help. 

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Law Offices of Robert T. Leonard, APC

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