Distinguishing between IRS phone calls and tax scammers

The Internal Revenue Service has changed the way it deals with overdue taxes, and that means third party collection agencies may now call you on the phone.

Like the IRS, the Better Business Bureau is concerned this change might give scammers new ways to trick people. The program started this month, and even if you know you don’t owe overdue taxes, it’s important to understand what the changes mean so you can avoid potential scams.

A federal law signed in 2015 lets four contractors collect unpaid tax debts for the government. According to the IRS, these are unpaid tax debts that were assessed several years ago and which the agency is no longer trying to collect directly.

The four private groups awarded the contracts to collect on debt are:

• CBE, P.O. Box 2217, Waterloo, IA 50704, 800-910-5837)

• ConServe, P.O. Box 307, Fairport, NY 14450-0307, 844-853-4875

• Performant, P.O. Box 9045, Pleasanton CA 94566-9045, 844-807-9367

• And Pioneer, PO Box 500, Horseheads, NY 14845, 800-448-3531.

There are many ways to tell whether a call you receive about tax debts is legitimate. The IRS says people with overdue taxes will always receive multiple contacts, including letters and phone calls, from the IRS first. The IRS will also always notify taxpayers before sending their accounts to a private collection agency.

Here’s how it will work, and how you can tell the difference between a legitimate debt collector and a scammer:

• You will pay the IRS directly. Private collection agencies will not ask for payment on a prepaid debit card, a practice used by current tax scammers. Instead, tax payers will be informed about electronic payment options currently located on irs.gov/Payments.

• You still get two letters. The IRS will notify taxpayers of a past due balance and the pending collection activity with two letters. One will be from the IRS informing the taxpayer their account is being transferred to a private collection agency (PCA) and the second from the designated firm.

• They will identify themselves. Private collectors will be able to identify themselves as contractors of the IRS collecting taxes. The collection agency employees must follow the provisions of the Fair Debt Collection Practices Act and must be courteous and respect taxpayer rights.

• Not everyone is affected. Accounts that will not be sent to private collection agencies include taxpayers who are: deceased, under the age of 18, military members in designated combat zones, victims of tax-related identity theft, currently under examination or audit, currently in a payment plan, classified as an innocent spouse and those in presidentially declared disaster areas.

• You can opt out. Consumers who do not wish to work with the assigned private collection agency to settle overdue tax accounts must submit a request in writing to the private agency directly.

The IRS adds that private collection firms will only be calling about tax debts that people have had for years and that they have been contacted about previously. Taxpayers can confirm they have an unpaid tax debt from a previous year by visiting irs.gov/balancedue.

The Better Business Bureau reminds all consumers, particularly those who have outstanding tax debts, that the IRS will explain this new process and attempt to work with individuals to set up payment plans. They will also give taxpayers the chance to question or appeal the amount owed. If you are unsure or suspicious of a call, take the time to verify.

Emily Valla is the marketplace director for Better Business Bureau Northwest: Idaho and Western Wyoming. Contact her at 208-523-9754 or by emailing emily.valla@thebbb.org.