IRS assigns some old debts to private collection agencies

IRS assigns some old debts to private collection agencies

According to reports, the IRS stopped using private debt collectors eight years ago after deciding that internal employees could handle the collections. But later this month it will undo years of precedent by handing over a handful of cases to four private collection firms. But Congress passed a law in 2015 requiring the IRS to restart the program. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.

The IRS stopped using private debt collectors in 2009 after the agency determined that IRS employees could better do the work. While you no longer have to make payments on your loan after it's been forgiven, the IRS will tax you on the discharged amount of $10,000, and you will be sent a 1099-C Cancellation of Debt form.

"It's not out of the realm of possibility to eventually get a phone call from IRS after notices go ignored", said Clay Sanford, spokesperson for the IRS. To make a payment, you have the option of using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or payment with a credit or debit card. Did you retire and begin collecting Social Security a year ago?

"The person says they're from the IRS and I was behind on payments. The IRS may let you set up a direct debit agreement where your payment will be automatically debited monthly, so there's no need to keep in mind to write and send them a check each month". Because the items you auction off are probably selling for less than you originally bought them for, you're taking a loss and the IRS views the transaction like a garage sale.

Tax filing season is here again.

Cavanagh said taxpayers can also request an automatic six-month tax extension by filing IRS Form 4868 and paying any tax due by the original deadline.

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The IRS is extending its customer service hours for its toll-free call center, which is in high demand as the tax deadline nears. A couple of resources to help with this include the IRS withholding calculator found at https://apps.irs.gov/app/withholdingcalculator, and W-4 information found at https://www.irs.gov/pub/irs-pdf/fw4.pdf. To learn more about the new private debt collection program, visit the Private Debt Collection page on IRS.gov.

Whether or not a taxpayer's account is assigned to a private collection agency, the IRS warns taxpayers to beware of scammers pretending to be from the IRS or an IRS contractor.

Another reason to offer feedback is this program is essentially an experiment and the IRS and lawmakers are watching it closely. You will NOT receive a phone call without initial paperwork from the IRS confirming tax amount owed.

St. Onge said in some cases you could be underestimating the value of what you donated.

"It has become clear that the IRS, like all agencies trusted with the American people's most sensitive personal information, needs to step up its game", he said. But these mistakes can mean the difference between you thinking you're getting a refund and the reality that you actually owe taxes, so be sure to check your calculations carefully.

The IRS has chosen four private companies to be involved in the program, and a taxpayer's account will only be given to one of those companies. The IRS looks at the taxpayer's income and assets to make a determination regarding the taxpayer's ability to pay. Or pay by credit card.

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