Filing for federal income taxes becomes quite the process, especially for those who forget to make their quarterly payments or set aside money for Uncle Sam, such as contractors or small business owners. Unfortunately, there is unwelcome news for those who owe unpaid taxes. The FAST (Fixing America’s Surface Transportation) Act now allows the IRS to use private debt collectors to collect on unpaid taxes.
In some instances, the IRS is even required to use private debt collectors due to lack of resources or the inability to locate the individual. Here some things to know:
- The FAST Act also allows the IRS to revoke your passport for accounts that are delinquent.
- If a taxpayer cannot pay immediately, then the collector can offer an installment deal, so long as it doesn’t exceed 5 years.
- There are some instances where a private collector cannot collect on an account, such as if the account is under audit, the taxpayer is deceased or under litigation, criminal investigation or is in a designated combat zone.
- Private debt collectors cannot accept payments, they only set-up payments for the IRS. If someone is calling and demanding payment now, especially made out to anyone other than the IRS, then you know you’re dealing with a fake. Never pay directly.
- The IRS will notify a taxpayer that they are sending their account to a private collection agency. The agency will then send a second letter, confirming the transfer and outlining how the taxpayer can pay their debt. If you get a call before receiving any official letters from the IRS, then be weary.