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If its been more than a year since you paid on or contacted the IRS for that annoying tax debt, the IRS may refer your account to a private debt collection agency.  However, the IRS only works with a handful of agencies.  Here’s how to know if that collection letter is legitimate:

1.  Collection letter comes from an IRS authorized Debt Collection Agency. After September 21, 2021 IRS will refer delinquent tax accounts to three authorized agencies: CBE Group, Inc.; Coast Professional, Inc.; and ConServe.
2. You already received a separate IRS letter indicating that your account had been referred to one of the above three Collection Agencies.
3. A call to the IRS (800-829-1040) or a review of your tax account transcript for the tax year in question (www.irs.gov) shows the debt due.
4. A review of YOUR records shows that the debt is due and/or correct (IRS records CAN BE incorrect).

Even if your account has been referred to an IRS authorized debt collection agency, their powers are limited. Agencies must follow the Fair Debt Collection Practices Act, and like IRS employees, must be courteous and respect taxpayer rights.  They can not take action to force payment on the account (e.g. file a lien or action for garnishment). AND NO they can not put you in jail. . .

If you want to work directly with the IRS, send mail letter to the Collection Agency via certified mail return receipt to the address on their Collection Letter indicating that you will work directly with the IRS.  These agencies are required to cease taxpayer contact if taxpayer indicates they will work directly with IRS.    If you can make payments and the total debt is under $50,000, you could go online to www.irs.gov and set up a streamlined payment agreement.  There is a convenience fee for this service and interest will accrue until the debt is fully paid.  Specify on each payment (e.g. check memo line) which tax year is being paid (“2018 Form 1040) and the last 4 digits of Taxpayer’s Social Security number or business EIN number so payment is correctly posted.

If finances don’t allow for payment or full payment, contact a tax professional specializing in IRS representation to assist.  Options to satisfy IRS Tax Debt may include Partial Payment Installment Agreement, Offer in Compromise (“settle debt for pennies on the dollar”),  Currently not Collectible (IRS won’t collect now but may collect later if situation changes) and Bankruptcy.  An experienced professional will help you decide what options are best for your situation and help you navigate the process.

One other consequence of IRS debt, interrupted travel plans. If you over more than $50,000 and plan to travel abroad,  the IRS can refuse and/or revoke a passport.  In short, address those IRS bills timely to reduce interest, penalties and additional headaches. . .