LANSING – Michigan Attorney General Bill Schuette today announced new tips on how to avoid falling prey to a debt collection scam in light of the IRS’s announcement that it will begin using private debt collectors to collect back taxes.
The new program, authorized by Congress in December 2015, allows private debt collection agencies to collect overdue taxes on behalf of the IRS. Taxpayers being assigned to a private collections agency have already received numerous contacts from the IRS, and have not yet resolved overdue taxes.
The program allows collection agencies to identify themselves as contractors of the IRS collecting taxes and requires the agencies to respect taxpayers’ rights and follow the protections for consumers in the Fair Debt Collection Practices Act. Payments by check should always be payable to the “U.S. Treasury” and sent directly to the IRS, not the private collection agency.
The alert issued today reminds Michigan residents to stay vigilant and look out for any unexpected contacts from anyone claiming to be collecting on behalf of the IRS. Even with the new collection plan, remember the IRS does not accept pre-paid debit cards, gift cards, or wire transfer payments.
Private Debt Collection of IRS Tax Debts
Under the new procedure, the IRS will assign private collection agencies to work on accounts where taxpayers owe money, but the IRS is no longer actively working the case.
The IRS, not the private collection agency, will give taxpayers and their representatives the first written notice that their accounts are being assigned to private collection agencies. The agencies will then separately send a second letter to the taxpayers and their representatives to confirm the transfer of the IRS accounts to that agency.
Employees of the collection agencies must follow the Fair Debt Collection Practices Act, which, among other things, means that:
A debt collector may not contact you at inconvenient times or places, like before 8:00 a.m. and after 9:00 p.m., unless you agree to it.
A debt collector may not contact you at work if they are told (orally or in writing) that you’re not allowed to receive calls there.
A debt collector cannot pretend to be someone else.
A debt collector cannot harass, threaten, or deceive you.
How To Avoid Being Scammed
Scam artists can be very sophisticated, and their tactics can be aggressive. For helpful tips on what to look for in a scam, read the Michigan Attorney General’s Consumer Alert on IRS Phone and Email Tax Scams. Important tips include:
If you are unsure whether you owe back taxes go to the IRS Account Balance and Payment History website.
If you do not want to work with an assigned private collection agency to settle your overdue taxes, you must submit a request in writing to the agency.
If you receive an unexpected call and you do not owe taxes, hang up immediately.
Remember that caller ID can be spoofed to make it look like the IRS is calling.
What to Do if You Get an Email or Phone Call Purporting to Come From the IRS
First, if you don’t owe taxes, hang up immediately or delete the email without opening it. Report any suspicious solicitation to the Treasury Inspector General for Tax Administration hotline at 800-366-4484. If you do owe on your taxes, call the IRS at 800-829-1040 if you need federal tax assistance.
You may forward emails to email@example.com, the address established by the IRS to receive, track, and shut down these scams. Detailed instructions for how to send the emails are available through the IRS. You may not receive an individual response to your email because of the volume of reports the IRS receives each day. You may also report misuse of the IRS name, logo, forms, or other IRS property using the Treasury Inspector General's website or hotline at 800-366-4484.
Remember that the only genuine IRS website is www.irs.gov. You should never get to this site using a link embedded into an email - instead enter the address in your browser. A website link embedded into an email can easily take you to a fake site.
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