Although the last two times Congress forced IRS to hire Private Collection Agencies largely were considered failures: resulting in losses to the government of $17 million (1996-1997) and $4.5 million (in the mid 2000's), they're at it again: IRS to Hire Private Collectors for Difficult Debts. Maybe they'll get it right this time? Certainly, there is a different focus this go around: older tax debt that has been essentially written off by the IRS.
The new 2015 law requires the IRS to hire private companies to pursue “inactive tax receivables.” These "receivables" must meet the following criteria:
- removed from the active inventory for lack of resources or inability to locate the taxpayer;
- for which more than 1/3 of the applicable limitations period has lapsed and no IRS employee has been assigned to collect the receivable; or
- for which, a receivable has been assigned for collection, but more than 365 days have passed without interaction with the taxpayer or a third party for purposes of furthering the collection.
Well - whether this new venture will work or not, the same important rules apply:
Collection Statute Expiration Date(CSED) will continue to matter. Tax debts expire 10 years after they were asssessed (with bankruptcy and failed Offers-in-Compromise extending the statute).
Qualifying for Offer in Compromise or Currently Not Collectible will needed to be considered. Private tax collectors will obviously want a payment plan from you. You might have to avoid they're aggressive pitch and get your case re-directed back to the IRS to qualify for these hardship procedures.
