Is the IRS Using Collection Agencies? Identifying Legitimate IRS Debt Collectors
There’s nothing more alarming than answering a phone call from an unknown number, only to find out that it’s a collection agency on the other end of the line—especially when they claim to be calling about tax debt. It’s even more stressful when you hear about the wide variety of fake IRS calls going around to scam scared taxpayers into forking over money via wire transfers, cryptocurrency, or gift cards.
The IRS does work with a select few collection agencies to collect tax debt, so it is possible that the call you received is legitimate. However, since you’re dealing with very sensitive information, it’s important to verify that you’re communicating with a real agency and not a scammer. Learn more about the companies that handle IRS debts, when the IRS hands debts off to collection agencies, and how to proceed if they reach out to you.
Does the IRS Use Collection Agencies?
The IRS does work with collection agencies under certain circumstances to help with the collection of unpaid taxes. However, your first communication with the collection agency should not come out of nowhere—the IRS sends two documents before the collection agency touches base with you.
The first is Notice CP40, which indicates that your tax account has been sent to a private collection agency. Publication 4518, titled “What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency,” answers some of the most common questions that come with an agency-assigned debt.
When Does the IRS Use Collection Agencies?
The IRS generally uses collection agencies when it’s unable to resolve the tax debt with its usual collection and contact methods. Often, this happens if the agency has not been able to reach you or if the tax debt is over a certain age. However, when the IRS uses collection agencies can vary based on the situation.
IRS-Approved Agencies
As of September 2024, the IRS only works with three collection agencies: CBE Group, Coast Professional, and ConServe.
However, the IRS may update or change its contractors—check the IRS website for the most up-to-date info about the collection agencies they currently use.
Learn More About the Agencies the IRS Uses
The three agencies selected by the IRS have been working with the agency since September of 2021.
CBE Group
CBE Group Inc. is located in Waterloo, Iowa. The company has existed for nearly 100 years and serves collection clients in multiple industries. In addition to its Waterloo location, the CBE Group collection agency has locations in Manila, Philippines and Clarksville, Tennessee. Their primary phone number is 800-910-5837.
Coast Professional
Coast Professional, Inc. is located in Geneseo, New York, and their primary phone number is 888-928-0510. They provide a wide range of forms and documents to help delinquent taxpayers pay off their agency-owned debt. They note that they will not contact taxpayers via email or text—only by phone or mail.
ConServe
Located in Fairport, New York, ConServe prioritizes fair treatment of taxpayers. In addition to contacting debtors by phone, ConServe may also reach out to you via mail. Beyond their service to the IRS, ConServe also works with other government lenders, commercial lenders, credit unions, financial institutions, and higher education.
What About Pioneer Credit Recovery?
Pioneer Credit Recovery worked with the IRS from 2015 until 2021 to help collect tax debt. When the IRS moved to draft new contracts in 2021, Pioneer Credit Recovery’s contract was not renewed.
Pioneer Credit Recovery is legitimate, but they do not handle IRS accounts anymore. If they reach out to you, it is because of a different debt—not your tax debt with the IRS.
If someone claims to be from Pioneer and calling about a tax debt, they are most likely a scammer. Do not engage. Hang up and call Pioneer or the IRS directly.
What to Do If a Collection Agency Contacts You
The IRS provides specific instructions on what to do when a collection agency contacts you claiming to be working for the IRS. Following these steps makes it easier to avoid fraudulent transactions:
- Access your tax transcript on your IRS Individual Online Account. Your tax transcript will include information about the amount you owe. It may also include a copy of the Notice CP40 that was sent to you, proving that your account was referred to a collection agency.
- Look for the Taxpayer Authentication Number on the collection agency’s original letter. Only you and the collection agency will have that number, so they will use it to verify your identity and prove that they are genuinely contacting you on behalf of the IRS. They ask you to provide the first five numbers of the Taxpayer Authentication Number, and then they provide the second five numbers.
- Verify the identity of the caller and the collection agency. Before you answer any questions, verify that the caller is calling from one of the three agencies permitted to represent the IRS. If you have any doubts about their identity, you can hang up and call the collection agency directly and speak to a representative. Once you have verified their identity, they will verify yours by asking a series of questions.
- Learn about the Fair Debt Collection Practice Act. The FDCPA applies to all third-party collectors, and it limits how, when, and how often debt collectors can contact consumers. If a collection agency violates the FDCPA or engages in threatening behavior or harassment, you can report them to the U.S. Treasury Inspector General.
- Write a no-contact letter if you don’t want to deal with private collectors. This will return the account to the IRS. Once the IRS has control of your account again, you can take advantage of payment options like an offer in compromise, currently not collectible status, or a partial payment installment agreement.
- Make payments to the IRS, not the collection agency. With most other types of debt, your payments go to the debt collector. But when you are working with an IRS-contracted agency, payments still go through the IRS, but the collector can help you set up the payment over the phone.
Signs That an Agency is Not Legitimate
When an IRS-approved collection agency contacts you, they are expected to be respectful, courteous, and professional. Part of their contract involves respecting taxpayers’ rights and working within the law to collect tax debt. If the agency that contacts you is pushy, demands immediate payment, or pushes you to make payment in a way that doesn’t make sense to you, those are all good signs that the caller may be a scam artist.
Although the collector can help you set up payments or payment plans, all payments will be to the US Treasury. It’s a sign of a scam if the collector requests payment via cryptocurrency, wire transfer, iTunes gift cards, PayPal, Venmo, or other types of gift cards. A legitimate debt collector working for the IRS will understand that it’s important to verify your identity and theirs, even if that means that it takes longer to collect payment.
What If Pioneer Credit Recovery or PCR Group Contacts You?
If you are contacted by Pioneer Credit Recovery or PCR Group, they are doing so for a non-IRS debt. You can handle any communication from them the same way you would handle another collection agency call.
How to Respond If You Believe You Owe IRS Taxes
If you know that the amount being claimed by the collection agency is accurate, you can discuss payment options with them directly. Unfortunately, private collection agencies do not have as much flexibility as the IRS, so they cannot set up partial payment installment agreements, offers in compromise, or currently not collectible status. They can only accept payment in full or set up an installment agreement.
What to Do If You Don’t Think You Owe the IRS Taxes
If the validity of the debt is in question, you should first look into your tax account transcript. The tax transcript will break down all of the communications you have received from the IRS, including your most recent tax bill with the initial amount due, interest, and penalties.
If you believe a payment was not applied to your account, you can work with the private collection agency employee to alert the IRS about the missing payment. If there are other discrepancies, you can contact a tax attorney to facilitate communication between you, the IRS, and the private collection agency. It is important to take swift action—even though your account is held by a collection agency, the IRS still has legal authority to file a Notice of Federal Tax Lien or take other collection actions.
While having your tax debt in the hands of a collection agency may limit your payment options, you can still apply for an installment agreement and work directly with the agency to set it up.
How to Get Your Account Sent Back to the IRS
If you are interested in looking into other payment arrangements, you are free to reach out to the collection agency in writing to request that your account be sent back to the IRS. From there, you can work with the IRS or a tax attorney to set up a payment plan that accommodates your needs. If you receive any communication from a collection agency and you’re uncertain about whether or not they are legitimate, you can find their number online and contact them directly rather than trying to verify their identity when they reach out to you.
Get Help With Your IRS Tax Debt
Confused about your options and uncertain about what to do next? W Tax Group can help. Whether you’re trying to find the right payment plan for your budget or you’re uncertain about the legitimacy of an IRS collection agency contacting you, let’s talk. Call us at 877-500-4930 or reach out to our team online to claim your free consultation.
