debt collectorsThanks to a recently-enacted law, the IRS is going to intensely pursue owed back taxes with the help of private debt collectors. Dubbed the FAST Act, this law has the potential to cause a lot of confusion with regards to how the IRS operates and legitimacy of tax-related collection inquiries.

What is the FAST Act?

The FAST Act is actually a five year transportation infrastructure improvement bill that, directly speaking, has nothing to do with taxes. However, buried a little over three-fourths of the way into the bill is a requirement that enables the IRS to pursue certain types of owed back taxes with private contractors. FAST Act also gives the IRS authority to revoke passports for anyone with “seriously delinquent tax debt” that exceeds the amount of $50,000. It also holds if you have a notice of lien in addition to this amount owed.

This isn’t the first time the IRS has used private collectors to assist it in getting back taxes — it’s actually the third. As such, there are laws in place like the Fair Debt Collection Act that these private collectors have to follow.

How does the FAST Act affect me?

While this law may not impact everyone, it’s important to know what qualifies you to get a call from a debt collector, as it may help you determine whether or not it’s legitimate. Here are the circumstances in which the IRS must defer to private tax collectors:

  • In order to obtain debts from anyone removed from the IRS’s “active inventory” due to an inability to find the taxpayer who owes the debt;
  • When more than one-third of the duration of the IRS’s statute of limitations has passed and a taxpayer’s bill has not been assigned for collections;
  • When a taxpayer whose delinquent tax bill has been assigned for collections, but the IRS hasn’t been able to make contact with that individual in more than 365 days.

If you meet all three criteria, the IRS may enlist the help of a private debt collector to contact you. Conversely, if none of these apply to you, the IRS should not be contacting you through a collection agency. If you are contacted, it’s a reasonable assumption you might be dealing with a scammer.

Both IRS-related provisions (private collection agencies and revoked passports) are set to come into effect “within three months” after the enactment of the act. President Obama signed the act into law in December of 2015, so these changes could occur very soon, if they haven’t already.

What are my rights?

Similar to the qualifying circumstances, the FAST Act provisions also spell out both specific groups of taxpayers and types of debt that are immune from private collection. These immunities include:

  • Taxpayers who have a pending or active in-offer compromise or installment agreement to pay off their debt;
  • Taxpayers who are part of an innocent spouse case;
  • Taxpayers who are under examination, litigation, criminal investigation, levy or appeals of any of these circumstances.

There are also limitations on the IRS’s authority to revoke passports. Your passport cannot be revoked if you have a compromise or agreement and are currently paying off your debts, or you have a debt that has been suspended because of either a due process hearing or relief.

It’s also important to note that as a taxpayer, you’re entitled to the protections that the IRS guarantees through the Taxpayer Bill of Rights.

How do I know if I’m getting scammed?

Considering phone scams were the top of last year’s IRS dirty dozen tax scams, these provisions, especially the private collection one, have the potential to cause a lot of confusion among taxpayers. In the past, the rule has been if you get a call from someone claiming to be with the IRS, it’s a telltale sign of a scam. Now that the IRS uses private debt collectors, things are a little muddy. As such, it’s important for taxpayers to know a handful of things.

1. If you don’t meet the criteria, you shouldn’t be contacted. This is where knowing the provisions and exceptions we listed above will be a great help. If someone contacts you and you don’t meet any of the conditions for private collections, or you definitively fall within the exception group, this will be a strong indication of a scam. If you receive a call concerning a back tax and aren’t sure of the legitimacy, it’s best to hang up the phone and call the IRS directly to inquire about the debt.

2. The debt collectors cannot accept payment on behalf of the IRS. Most importantly, any collection agency that contacts you cannot collect any back tax payments, as all transactions must be processed by the IRS itself. If the collector is demanding you pay the balance through them or threatens you in any way, it’s a scam and you should immediately report it to the Treasury Inspector General for Tax Administration as well as the Federal Trade Commission. Another important thing for taxpayers to know is that private debt collectors will usually first try to contact you initially by letter, then follow up via phone. Similarly, you will not be contacted via email by the IRS or a legitimate debt collector acting on behalf of the IRS. If you receive an email regarding your back taxes, it’s essential that you report it to the agencies listed above and do not click on any links, as they are likely phishing links.

3. The State Department will contact you regarding your passport. As far as the revoking of your passport, you’ll be contacted by the State Department if the IRS has authorized the nullification of your passport. If you are abroad, you will be permitted to return home. It’s important to note that scammers may attempt to take advantage this provision by trying to gather taxpayers’ personal information. As such, if you receive a call, email or letter stating your passport is revoked and in order to get it reinstated you must provide all of your personal information as well as an upfront payment of your back taxes, it’s likely a scam.

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