You get a call from a company you’ve never heard of claiming to collect a tax debt on behalf of the IRS. Your first instinct might be that it’s a scam — and honestly, that’s a reasonable instinct, because IRS impersonation scams are rampant. But here’s the thing: it might actually be legitimate.
Since 2017, the IRS has been using private debt collection agencies to pursue certain unpaid tax debts. It’s a controversial program, and it confuses a lot of taxpayers. If you’ve received a call or letter from one of these agencies, here’s exactly what you need to know — including how to tell the difference between a real collector and a scammer, what your rights are, and what you should do next.
Why Does the IRS Use Private Debt Collectors?
The IRS has a massive inventory of unpaid tax debts — far more than its own collection staff can actively pursue. Congress authorized the Private Debt Collection (PDC) program to help the IRS recover money from accounts that have been sitting dormant — cases where the IRS hasn’t been actively working the debt and doesn’t plan to in the near future.
The idea is that private collectors can pursue these lower-priority accounts while IRS staff focus on more complex cases. Whether or not you agree with the policy, the program is real, it’s legal, and it’s been placing calls and sending letters to taxpayers across the country since it was relaunched.
Which Companies Does the IRS Use?
The IRS contracts with a small number of IRS-approved private collection agencies. As of now, the authorized agencies are CBE Group, Performant Recovery, ConServe, and Pioneer Credit Recovery. If you receive contact from any other company claiming to collect on behalf of the IRS, treat it as a scam and do not engage.
How the Process Is Supposed to Work
Before a private collector ever contacts you, the IRS is required to send you two letters: first, a letter from the IRS itself notifying you that your account is being transferred to a private collection agency, and second, a letter from the specific collection agency that will be handling your account. These letters come before any phone calls.
If you receive a phone call before receiving those letters, that is a major red flag. Legitimate private collectors follow this notification process without exception.
Once your account has been transferred, the private collection agency will work with you to set up a payment arrangement. Importantly, they can only request payment directly to the IRS — never to themselves. If anyone tells you to send payment to the collection agency, to a gift card, to a wire transfer, or to any account other than the U.S. Treasury, hang up immediately. That is a scam.
How to Verify the Contact Is Legitimate
If you receive a letter from one of the authorized agencies listed above and want to confirm it’s real, you can call the IRS directly at 1-800-829-1040 and ask whether your account has been assigned to a private collection agency. The IRS can confirm this and tell you which agency has your account.
You can also check your IRS online account at IRS.gov, where your account status and any outstanding balances are visible. If there’s a balance showing and the agency matches one of the four authorized contractors, the contact is very likely legitimate.
What Are Your Rights When Dealing With a Private Collector?
This is where many taxpayers don’t realize they have significant protections. Private debt collectors working on behalf of the IRS are bound by both the Fair Debt Collection Practices Act (FDCPA) and IRS guidelines. That means they cannot harass you, threaten you, use abusive language, call at unreasonable hours, or misrepresent who they are or what you owe.
You have the right to ask the collector for written verification of the debt. You have the right to dispute the amount if you believe it’s incorrect. And critically — you have the right to have the account returned to the IRS if you prefer to deal with the IRS directly rather than a private agency.
If the private collector is behaving inappropriately — pressuring you, threatening consequences beyond what the IRS is actually authorized to do, or using deceptive tactics — you can report them to the IRS, the Federal Trade Commission (FTC), and the Consumer Financial Protection Bureau (CFPB).
What Accounts Get Sent to Private Collectors?
Not every tax debt ends up with a private collector. The IRS assigns accounts to these agencies when the debt meets certain criteria: the account has been removed from active IRS collection, it’s not currently being worked by an IRS revenue officer, the taxpayer is not in bankruptcy, and the debt is not related to an ongoing IRS examination or litigation.
Some taxpayer groups are specifically excluded from the private collection program entirely. These include individuals over the age of 65, victims of tax-related identity theft, those receiving Social Security disability or supplemental security income, and taxpayers whose income is below a certain threshold. If you fall into one of these categories and a private collector has contacted you anyway, you should notify the IRS, as your account may have been assigned in error.
Should You Work Directly With the Private Collector?
This depends entirely on your situation. If the debt is correct and you can afford to pay it — either in full or through a payment plan — working with the private collector to set up an arrangement is a reasonable option. The payment plans they can offer are IRS-approved installment agreements, so you’re not agreeing to anything different from what you’d get through the IRS directly.
However, if you believe the debt is incorrect, if the amount is larger than you can manage, or if you think you might qualify for a better resolution option — like an Offer in Compromise, Currently Not Collectible status, or penalty abatement — then working with a tax resolution professional before agreeing to anything is the smarter move.
Private collectors are not equipped to evaluate whether you qualify for these programs. Their job is to collect the balance as assigned. A tax professional’s job is to evaluate every option available to you and pursue the one that results in the best possible outcome.
What If You Simply Can’t Pay?
If you genuinely cannot afford to pay the debt — not now, and not in the foreseeable future — you have options beyond setting up a payment plan with a private collector. You can request that the account be returned to the IRS and then apply for Currently Not Collectible status, which temporarily suspends collection activity. You can explore an Offer in Compromise if your total financial situation supports it. Or you can work with a tax professional to evaluate whether any portion of the debt can be reduced through penalty abatement.
The private collector cannot approve any of these options on their own — those decisions have to go back to the IRS. But a tax professional who knows the system can navigate that process on your behalf.
The Bottom Line
Receiving contact from a private debt collector about an IRS debt is alarming, but it doesn’t have to be overwhelming. Know your rights, verify the contact is legitimate, and don’t agree to any payment arrangement before you fully understand your options.
At Brightside Tax Relief, we work with clients who are in exactly this situation every day. Whether you’ve just received your first letter from a private collector or you’ve already been dealing with one for months, we can review your account, explain what you actually owe, and help you find the most favorable resolution available.
Call us today at 844-638-0800 or visit brightsidetaxrelief.com. You have more options than you think.
The information in this article is for general educational purposes only and does not constitute legal or tax advice. Every tax situation is unique. Contact a qualified tax professional for guidance specific to your circumstances.
