Understanding the Role of IRS Federal Tax Collectors

Who Are IRS Federal Tax Collectors?

IRS federal tax collectors are those empowered to collect IRS federal taxes due on behalf of the Internal Revenue Service (IRS).

The IRS is a branch of the US Treasury Department and serves as the national tax collecting body. In other words, the IRS is the primary federal tax collector. Their role is to enforce the U.S. tax laws and collect taxes on behalf of the federal government. The taxes the IRS is empowered to collect include: individual, corporation, employment, estate, gift, and excise taxes.

To execute its tax collecting function, the IRS employs the services of some of its officials (IRS tax collectors) and private agencies. These entities are empowered to recover unpaid taxes from taxpayers, and so, if you’re in tax debt, you will likely have to deal with these officials or agencies at some point.

Keep reading to understand how federal tax collectors operate, and how an Oklahoma City tax attorney can help you.

Federal Tax Collection Entities

The major players involved in the federal tax collection process are as follows:

IRS Officials (Tax Collectors)

IRS tax collectors are employees of the IRS whose role is to deal with overdue tax accounts and ensure that the defaulting individual pays the assessed taxes. This role is not to be confused with that of a tax examiner.

Tax examiners are also employees of the IRS. However, their primary function is to examine income tax returns and deductions claimed by individual taxpayers and small businesses and notify the taxpayer of any additional taxes owed.

In contrast, the tax collector’s job starts once an overdue tax account is assigned to them. Once this happens, the tax collector is required to notify the taxpayer of their outstanding debt. They then communicate with the taxpayer to ensure the tax is paid quickly, this includes setting up IRS Installment Agreement Payment Plans and so on. The tax collector’s goal is to collect as much back taxes as possible, as quickly as possible.

Private Collection Agencies

In certain instances, the IRS may outsource the collection of outstanding and inactive tax debts to private debt collection agencies/enterprises as independent contractors. This usually occurs in circumstances where:

  • The tax account is old
  • The tax account is delinquent
  • The IRS lacks the required resources to handle the cases
  • The taxpayer or their third-party representative have yet to communicate with the IRS on their account in the last year.
  • It has been more than two years after an assessment, and the accounts were not allocated for collection.

If the IRS transfers your file to a private collection agency, they should notify you in writing about the transfer.

The specific private collection agency should also issue an independent letter confirming this transfer to you or your representation. This letter helps to confirm the identity of the private collector and reduces the likelihood of scams. In some cases, the letter would also contain details of suggested payment plans that enable you to pay in full within seven years or the provided expiration date, whichever comes first.

Currently, the IRS works with three private collection agencies:

Despite their independence, these private tax collectors are highly regulated. They are required to comply with the Fair Debt Collection Practices Act and treat taxpayers with courtesy and respect. If you experience hostile conduct with your private tax collector, consider making a report to the IRS.

Taxes That Private Agencies Can’t Collect

Not every case involving outstanding taxes can be handled by private tax collection agencies. The IRS generally will not assign cases to private agencies in certain circumstances, including the following:

  • The taxpayer is deceased
  • There is an active or pending Offer In Compromise on the account
  • There is an active installment agreement payment plan
  • The taxpayer qualifies as an innocent spouse
  • The taxpayer has been a victim of tax-related identity theft

Private Tax Collectors: Scam Protection

When your case is assigned to a private collection agency, and you get a call from them, be sure that the person you’re speaking with represents one of the approved private collection agencies mentioned above. You may be asked to mention a part of your tax authentication number to validate your identity. However, be careful when giving out your information just in case it is a scam call. 

Using a tax attorney can help protect you against scams as they will know a scam when they see it.

Note that a private debt collector will not:

  • Request money to be sent directly to them or on a prepaid debit, iTunes, or gift card.
  • Take any form of enforcement action, including levy or Notice of Federal Tax Lien issuance against you.

Anyone who calls you requesting any of the above is most likely a scammer, and giving them your information or obliging their request could expose you to financial loss and the risk of tax-related identity theft.

The Federal Tax Collection Service

The Federal Tax Collection Service is an initiative of the Bureau of the Fiscal Service, which is also under the supervision of the U.S. Treasury Department. The service does not operate as a tax collector in the context of ensuring payment of back taxes.

Instead, it serves as a platform that allows those making business tax payments and processing payroll taxes to complete their payments and get results the same day using their financial institutions and the Electronic Federal Tax Payment System (EFTPS).

As such, while the system helps to collect taxes, it relies on the voluntary participation of the targeted taxpayers to function. If your job involves making employee tax payments for your company, consider using this service for speedy results.

How a Federal Tax Attorney Can Help

There are several penalties for failure to pay taxes, including losing valuable assets and property. So, if you’re struggling to pay your taxes, you do not need to wait for the federal tax collectors to contact you. It will greatly benefit you more if you’re proactive about clearing up your federal tax liability.

If you need help figuring out where to start or feel that you can’t afford to clear up your tax debt all at once, there are legal options you could explore depending on your circumstances.

A federal tax attorney can help you identify the tax resolution option that works best for you and help you negotiate your resolution efficiently. This way, you get to relieve yourself of your debt quickly and conveniently. Consider contacting a tax attorney today to get started.

If you have further questions about federal taxes, tax liens, or Tax/IRS Debt Resolution, you can reach out to us at Hutton Tax Solutions. We are experienced federal tax attorneys and are prepared to help you find solutions to your federal tax issues. Contact us immediately for more information and legal tax assistance. We’d be glad to help.