Delinquent Taxes and ‘Phishing’

The IRS is telling taxpayers how to determine if a person seeking personal financial information is acting on behalf of the agency.

As the Internal Revenue Service begins using private debt collection services to try and collect delinquent taxes, the agency is telling taxpayers how to tell if the person contacting them is acting on behalf of the agency.

The agency’s concern appears to be justified as there is no shortage of people who would like to get access to personal information for their own financial gain. There have already been a number of scams where people have impersonated federal officials in an attempt to trick people into giving out personal or financial information or even conning people out of cash.

In fact, federal employees have not been immune from these scam artists as a phony e-mail has been sent to federal employees asking them for personal information about their Thrift Savings Plan. (See Are You A “Phish”?)

The IRS can reasonably expect these scams to proliferate with the publicity about private debt collectors assuming a role in collecting delinquent tax payments.

Ways to Identity Legitimate IRS Contact

The agency has set up these procedures to enable taxpayers to ensure the person contacting them is acting on behalf of the agency.

Taxpayer notification

All taxpayers who will be part of the private debt collection effort will know they are in the program before they are contacted by a private collection agency. If you haven’t previously heard that you’re in the program, be wary of any bill collectors saying they are working on behalf of the IRS.

IRS letter

All participants selected for the program will get a letter from the IRS, telling them they’ve been selected for the private debt collection program. The name of the company will be included in the letter.

Collection agency letter

All participants will subsequently receive a second letter, this one from the collection agency, informing the taxpayer they will be contacted soon regarding back taxes.

Money collected

When paying a collection agency on behalf of the IRS, remember that the check will be made out to the U.S. Treasury – not to an individual or firm. The collection agency will provide the appropriate IRS coupon and mailing address for the payment. The collection agencies will never ask for cash or checks written to individuals.

Contact the IRS

If in doubt, check or call the IRS at 800-829-1040 for more information.

Unsurprisingly, as the agency and the union representing many IRS employees are preparing for contract negotiations, the union that represents many IRS employees is encouraging taxpayers to refuse to participate in the program. The National Treasury Employees Union has drafted a letter that explains to taxpayers how to insist on dealing directly with the Internal Revenue Service rather than with the company hired to collect the debt.

According to a report by the Associated Press, the IRS plans to assign 12,500 accounts with unpaid tax debts to three private agencies starting in September and that about 40,000 accounts will be turned over by the end of the year.

For this program, the IRS chose taxpayers who owe less than $25,000 and do not dispute their government debt.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47