irs collections department

Delinquent Tax Bill: IRS Collections Department Joins Private Agencies


Do your clients owe on delinquent tax bills? They probably do and as others have done for years… they skulk into a corner and ignore calls from the IRS. Oh, and they don’t open their mail either.


If they don’t respond it won’t exist, right? Wrong. Denial doesn’t make overdue tax accounts go away.


A letter is posted on the IRS website explains why. Check it out.


A new letter is being sent to your clients notifying them that theiroverdue account that they’ve been ignoring has been assigned to a private collection agency. (Their tax bills)


Background—statutory provisions. The Fixing America’s Surface Transportation (FAST) Act (P.L. 114-94, 12/ 4/2015) added Code Sec. 6306(c) which provides, “notwithstanding any other provision of law, the Secretary shall enter into one more qualified tax collection contracts for the collection of all outstanding inactive tax receivables”.


There you go.


If you’ve ever dealt with collectors you know one thing for sure. They are relentless. They won’t lose interest, and they don’t give up until the bill is paid.


Does this include all receivables across the board? Of course not. The IRS might be relentless but they don’t lack compassion. They usually let dead people off the hook—and minors under 18.


A tax receivable (tax bills) is not eligible for collection under a qualified tax collection contract (outside collection agency) if the receivable:

  • Is subject to a pending or active offer-in-compromise or installment agreement
  • Is classified as an innocent spouse case
  • Involves a taxpayer identified by IRS as being
    1. Deceased
    2. Under the age of 18
    3. In a designated combat zone
    4. A victim of tax-related identity theft

What Does This Mean to You?

As a tax preparer at the moment your tax delinquent clients have entered into a pending OIC (Offer in Compromise), they are booted off the collections list while you work to resolve their accounts.


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