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New Payment Option Available to Taxpayers Participating in Private Debt Collection Program


Taxpayers now have a new option when it comes to paying tax debt through the private debt collection program that involves using a pre-authorized direct debit card. If you owe a tax debt to the IRS and have questions about whether you qualify for repayment through the private debt collection program, you should consider contacting experienced Florida & nationwide unfiled taxes attorney Ronald Cutler who can evaluate your case and explain your legal options.

The Private Debt Collection Program

The private debt collection program was put in place by Congress in April 2017 and allows the IRS to contract private collection agencies (PCAs) to collect outstanding tax liabilities on the agency’s behalf. Although a number of factors contribute to the IRS’ decision to assign certain accounts to PCAs, most of the accounts that fall under this category are old or overdue. The IRS will not, on the other hand, assign accounts to PCAs for taxpayers who are:

  • Currently under examination, litigation, investigation, or a levy;
  • Subject to active or pending offers in compromise;
  • Subject to installment agreements;
  • Subject to a right of appeal; or
  • Classified as innocent spouses.

In the event that a taxpayer who falls under one of these categories is assigned to a PCA, that company will send the account back to the IRS.

Pre-authorized Direct Debit Option

Under the IRS’ new debt collection program taxpayers now have the option of choosing to use a pre-authorized direct debit to pay off their federal tax debt. This is true regardless of whether the taxpayer is making only a single payment or a series of payments. To take advantage of this option, taxpayers must give their written permission to the specific private collection agency that has been authorized to submit payments to the Department of the Treasury on the taxpayer’s behalf. In this way, taxpayers can more securely and conveniently schedule multiple payments by making a single phone call to the assigned private collection agency. In order to be considered valid, the authorization provided by the taxpayer must:

  • Be mailed or faxed directly to the private collection agency; and
  • Include the payment schedule and bank account information.

Once the agency has received the authorization, it will draft a check in an amount dictated by the payment schedule and made out to the Department of Treasury within 24 hours. This direct debit option can be modified or canceled up to one business day before the scheduled payment.

It’s also important to note that even when a taxpayer does take part in the private debt collection program, they will not receive phone calls demanding payment. Instead, taxpayers will first receive two letters, one from the IRS and one from the private collection agency. Both will include a Taxpayer Authentication Number rather than the taxpayer’s SSN to confirm its validity.

Call Today for Legal Assistance

If you are utilizing the IRS’ private debt collection program and think you may qualify for the debit repayment option, please call experienced unfiled taxes lawyer Ronald Cutler, P.A. at 386-490-9949 to learn more about how we can help with your case.