Published: | Last Updated: October 17, 2023
Assigning Delinquent Account to a Private Collection Agency
View our interactive tax map to see where you are in the tax process. It could help you navigate your way through the IRS.
If it’s from the IRS, the notice will have instructions on how to respond. If you want more details about your tax account, you can order a transcript. Also, review your notice or letter to see if there is a specific website link to visit for additional information. This is usually located at the end of the notice or letter.
If it is from a PCA, the letter should explain that your tax debt has been assigned to them and provide you with a Taxpayer Authentication Number. The PCA uses this number to verify your identity and you can use the number to confirm the PCA’s identity. See Private Debt Collection. Also see, Private Debt Collection Frequently Asked Questions.
If it’s from another agency, such as a state tax department, you’ll need to call that office for an explanation.
If the letter is from the Department of the Treasury Bureau of the Fiscal Service, these notices are often sent when the IRS takes (offsets) some or all of your tax refund to cover another, non-IRS debt. The Bureau of the Fiscal Service only facilitates the transfers of the refund between IRS and the agency that the balance is owed to — it won’t have information about your IRS account or where the money is being sent.
If you don’t believe you owe the IRS, call the IRS toll-free at 1-800-829-1040 (or TTY/TDD 1-800-829-4059) for more information or assistance in resolving the debt. See Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don’t Agree.
If you can pay the amount in full upon receipt of the notice, you can do so electronically at pay your taxes on IRS.gov. You can also sign up to view your account information securely online. Once your federal tax debt is paid in full, then your tax account will be returned to the IRS and closed.
If you can’t pay the full amount, you need to decide which payment option might work for your situation and act to set up a payment plan or discuss other alternatives. Being proactive in addressing the tax debt may prevent additional penalty and interest charges and eliminate the need for the collection agency to contact you. For specifics, see I got a notice from the IRS and Private Debt Collection Frequently Asked Questions.
PCAs cannot take any type of enforcement action against you to collect your debt. However, the IRS does have the legal authority to file a Notice of Federal Tax Lien or issue a levy to collect an overdue account.
If you do not wish to work with your assigned PCA to settle your overdue tax account, you must submit this request in writing to the PCA. (See No Contact Letter.)
If you do speak with the PCA, they can ask if you can full-pay your tax debt within 120 days. If you can’t, the statute allows the PCA to offer you a plan known as an installment agreement under which you may pay your tax debt in full over seven years or less. A PCA may not take collection action (such as filing a lien, levying your bank account, or garnishing your wages), nor may it issue a summons or report your IRS tax debt to the credit rating agencies.
You can call the IRS and explain that you do not want to pay in installments or can’t afford to do so. If you orally advise the PCA you plan to contact the IRS about collection alternatives, the PCA will place a 60-day hold on your account. If you have not reached an agreement with the IRS within those 60 days, the PCA may resume collection activity on your account. Because many actions take longer than 60 days, you may wish to write to the private collection agency to request that it stop contacting you and you no longer wish to work with them. (See No Contact Letter.)
For more specifics on your notice or letter, visit Understanding your IRS Notice or Letter on IRS.gov or review the information below directly related to your notice or letter.
The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn’t working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.
Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.
Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List.
Notice CP40, Assigning Delinquent Account to a Private Collection Agency