If you have unpaid federal taxes, you may eventually receive a call from a private collection agency working on behalf of the IRS. The IRS uses private collection agencies (PCAs) to collect certain overdue federal tax debts that have been assigned to them.
Private tax debt collection can be confusing, especially because these companies are not the IRS. Understanding how the program works, what private collectors can do, and what rights you have can help you avoid scams and make better decisions about your tax debt.
How the IRS Private Collection Program Works
The IRS private debt collection program allows authorized private collection agencies to contact certain taxpayers about unpaid federal tax debts. The program was relaunched in 2017 under the Fixing America’s Surface Transportation (FAST) Act.
Not every tax debt is assigned to a private collection agency. The IRS generally assigns certain inactive accounts that meet specific eligibility requirements. Some accounts are excluded from the program, including certain taxpayers who are deceased, under 18, victims of identity theft, facing certain collection actions, or already involved in certain IRS resolution programs.
As of 2026, the IRS has contracts with three private collection agencies: CBE Group, Coast Professional, Inc., and ConServe. Performant and Pioneer Credit Recovery were former contractors whose IRS contracts ended in September 2021.
The agencies do not replace the IRS. They work as contractors and have limited authority. The IRS remains responsible for the taxpayer’s account and retains the authority to take formal enforcement action when appropriate.
How to Know If a Collection Call Is Legitimate
One of the most important protections is the IRS notice process.
Before a private collection agency contacts you, the IRS will send you a written notice explaining that your tax account has been assigned to a PCA. Individual taxpayers generally receive a CP40 notice, while certain business taxpayers may receive a CP140 notice.
The private collection agency will then send its own letter. These notices contain information that can help you verify the legitimacy of the collection activity.
The IRS and PCA letters also include a Taxpayer Authentication Number (TAN). The PCA can use this number as part of the identity-verification process when communicating with you.
If someone calls claiming to be an IRS private debt collector and you have never received the required notices, be cautious. Do not immediately provide your Social Security number, bank information, credit card number, or other sensitive information.
You can contact the IRS through an official IRS phone number or your IRS online account to verify your tax situation.
What Private Tax Collectors Can Do
Private collection agencies have a limited role. Their primary purpose is to communicate with taxpayers about eligible federal tax debts and help arrange voluntary payment.
A private collector may:
- Contact you by phone or mail about your assigned tax debt
- Explain the amount the IRS says you owe
- Discuss payment options available through the collection program
- Help establish certain payment arrangements
- Monitor an approved payment arrangement
- Provide information about your payment requirements
Under the IRS private collection program, a PCA may generally establish and monitor certain payment arrangements that allow the taxpayer to pay the balance in full within seven years or before the collection period expires, whichever comes first.
However, private collectors do not have the same enforcement powers as the IRS.
What Private Collectors Cannot Do
A private collection agency cannot independently:
- Issue a tax levy
- Seize your bank account or property
- Issue a Notice of Federal Tax Lien
- Take other formal IRS enforcement actions
- Arrest you for owing taxes
- Use criminal threats to force payment
The IRS, not the private collection agency, is responsible for formal collection enforcement.
A legitimate private collector may discuss your debt and available payment arrangements, but it should not threaten immediate seizure of your home, arrest, or other enforcement actions that the agency itself cannot take.
You Still Have Rights
Being contacted by a private collection agency does not mean you lose your rights as a taxpayer.
You can ask questions about the debt and the identity of the collection agency. You should also carefully review your IRS notices and make sure the debt belongs to you.
If you believe the debt is incorrect, the amount is wrong, or there is another problem with your account, contact the IRS or a qualified tax professional to determine what options may be available.
You may also have options beyond simply paying the balance in full.
Depending on your financial situation and eligibility, possible tax-resolution options may include an installment agreement, an Offer in Compromise, or a request for Currently Not Collectible status.
Not every taxpayer qualifies for every option. The IRS considers factors such as income, expenses, assets, and the amount of tax owed.
Financial Hardship May Change Your Options
If paying your tax debt would prevent you from meeting basic living expenses, tell the IRS or your tax professional about your financial hardship.
Some taxpayers may qualify for Currently Not Collectible (CNC) status. If the IRS approves CNC status, collection activity may be temporarily suspended because the taxpayer cannot currently afford to pay.
CNC status does not erase the tax debt. Interest and penalties may continue to accrue, and the IRS may review the taxpayer’s financial situation again in the future.
Another possibility is an Offer in Compromise (OIC), which may allow an eligible taxpayer to settle certain tax debts for less than the full amount owed. Approval is not automatic, and taxpayers must meet IRS requirements.
Private collection agencies have limited authority when it comes to these types of tax-resolution options. A PCA cannot approve an Offer in Compromise or place an account into Currently Not Collectible status. If you need one of these forms of relief, you may need to work with the IRS or a qualified tax professional.
Watch Out for Tax Collection Scams
Tax scams remain a major concern because criminals often imitate legitimate IRS employees and private collection agencies.
A scammer may claim that you owe taxes and demand immediate payment. They may threaten arrest, deportation, property seizure, or other consequences if you do not pay immediately.
These Are Major Warning Signs
Legitimate tax collection should not involve demands for gift cards, cryptocurrency, or other unusual payment methods. Be especially careful if the caller pressures you to act immediately or refuses to let you verify the information.
Do not rely on caller ID. Scammers can make phone numbers appear legitimate.
Instead, independently verify the information through official IRS channels before making a payment or sharing sensitive financial information.
What to Do If a Private Collector Contacts You
If you receive a legitimate collection notice or phone call, do not ignore it.
Start by confirming that the agency is authorized to handle your account. Review the IRS notice and the PCA’s letter, and use the information provided in those notices to verify the assignment.
Next, determine how much you owe and whether you can realistically afford the proposed payment.
Payments for your federal tax debt are made to the IRS or U.S. Treasury, not directly to the private collection agency. A PCA may help establish an authorized payment arrangement, including certain direct-debit arrangements.
If you cannot afford the proposed payment, do not agree to an arrangement that you cannot maintain. Instead, review your financial situation and determine whether another tax-resolution option may be available.
If you need a solution such as an Offer in Compromise or Currently Not Collectible status, remember that the private collection agency cannot approve those options. You may need to work directly with the IRS or a qualified tax professional.
Get Help With Tax Debt
Private tax debt collection can make an already stressful tax problem more difficult. However, receiving a call from a private collection agency does not mean you have no options.
You may be able to arrange payments, request hardship relief, pursue an Offer in Compromise, or explore another solution based on your financial circumstances.
SCL Tax Services in the Bronx, NY, helps individuals and businesses address federal and New York tax problems. If you are dealing with IRS debt or a private tax debt collector, professional guidance can help you understand your options and determine the right next step.
Contact SCL Tax Services today to schedule a free 15-minute consultation and discuss your tax-resolution options.