What To Know About IRS Private Tax Collection Agencies

The IRS assigns some delinquent accounts to third-party collection agencies. Typically, you should receive a letter stating that your IRS tax debt has been assigned to a third-party collector, but in some cases, the collection agency may call you before the letter reaches you. To protect yourself, you shouldn't talk with the collector until you verify their identity and double-check that they really work for the IRS. This post explains how to do that. Then, it looks at your rights and options when dealing with collectors and outlines how to return your account to the IRS.

Key takeaways

The IRS has used private collection agencies to collect some tax debts since 2015.
The IRS website keeps an updated list of the collection agencies they're currently working with.
You'll receive a letter with a code that allows you to verify the collection agency's legitimacy.
You can make payments with the help of the collector, but all payments should be to the U.S. Treasury.
If you want to apply to settle the tax or get your account marked as uncollectible, you must work directly with the IRS.

What to Expect If the IRS Assigns Your Account to a Third-Party Collector

The IRS will send you a letter -- typically CP40 -- if they send your account to a third-party collection agency. The letter will note the name and contact details of the collection agency, as well as how much you owe in interest and penalties. The collection agency may also send you a "placement letter" stating that the account has been referred to them for collections.

At some point, the collection agency will call you -- if they don't have your correct phone number, they may use skip tracing to find you, which can involve calling people to ask if they know how to reach you, but by law, the collector is not allowed to disclose anything about your debt during these phone calls. Generally, the collector should call after you receive both the IRS and collection agency letters, but in some cases, your first point of contact may be a phone call. For instance, that may happen if the IRS doesn't have the correct address for you.

How to verify the collection agency

Keep in mind that you don't need to talk to the collection agency if you feel uncomfortable or are worried that the caller may be a scammer. However, you can verify their identity in a few ways:

Check the IRS website for an updated list of third-party collectors and make sure your agency is listed.
Use the taxpayer authentication number from the CP40 notice -- the agency should be able to tell you the number listed on your notice.
Call the IRS and ask if they have referred your account to a collection agency -- unfortunately, you can't get this information from your online account.

Making payment through the collection agency

The collector can take your payment information over the phone and process a payment for your tax debt. However, the payment will go to the U.S. Treasury, not to the collection agency. If a collector is asking for a payment made out to a third party, or if they are requesting unusual forms of payment -- for example, gift cards -- they are not a legitimate agency and you should hang up.

You can pay off the debt in full through the collector, or they can help you set up a payment arrangement where you make monthly payments. These are the only two options that you can get through a private collector. If you want to apply for a settlement or take advantage of any of the IRS's other relief programs, you need to have your account sent back to the IRS.

Your rights when working with a third-party collector

You have rights as both a taxpayer and a debtor dealing with a collection agency. The collector must uphold your taxpayer rights, which include the right to be informed, quality service, confidentiality, and the right to representation. But the collector must also follow the terms of the Fair Debt Collection Practices Act (FDCPA). That collection of laws bars collectors from harassing or threatening you. If a collector is not upholding your rights as a taxpayer or their obligations as a debt collector, you should contact the IRS directly, reach out to a tax professional for help, and consider reporting the agency to your Secretary of State.

Returning your account to the IRS

Many tax pros recommend not working with private collection agencies and instead sending your account back to the IRS. To do this, you must send a written notice to the collector saying that you don't want to work with them and prefer to work directly with the IRS. Then, in about 30 days, your account should be back with the IRS, and you can contact them directly.

The official process requires a written letter, but often, you can get the collector to expedite the process by giving them a verbal refusal to pay and ceasing them from calling your cell phone or place of business. Then, they may decide that they're not going to be able to collect the debt and send the account back to the IRS. However, you shouldn't rely on this approach -- you should still send a letter.

IRS tax debt payment and relief options

Once your account has been returned to the IRS, you have the following options:

Installment agreement -- as noted above, you can set this up through the collection agency, but you may have more options if you work directly with the IRS.
Offer in compromise -- settle your tax debt for less than owed based on your disposable income and the equity in your assets.
Currently not collectible status -- prove you can't pay and the IRS will stop all collection actions against you, until your finances improve.
Penalty abatement -- get penalties waived from your account to make it easier to pay.

If the tax debt is incorrect, you can also deal with that through the IRS directly or through the appeals process. The exact steps vary based on the situation, but you cannot appeal the amount due through the collection agency.

Why Did My IRS Account Get Sent to a Private Collection Agency?

The IRS typically sends inactive accounts to private collectors. A case may be placed on inactive status if

More than 1/3 of the applicable limitation period has passed, and no IRS employee has been assigned to collect the debt, or
The tax has been assigned to an IRS employee for collection, but over a year has gone by without interaction with the taxpayer about the taxes.
The IRS can't find you to collect the tax debt from you.

The IRS will not assign accounts to private collection agencies if the taxpayer is

Deceased
Under the age of 18
In a designated combat zone
A victim of tax-related identity theft
Currently under examination, litigation, criminal investigation or levy
Subject to pending or active offers in compromise
Classified as an “innocent spouse”
Subject to an installment agreement
Subject to a right of appeal
In a presidentially declared disaster area and has requested relief from collection

If these situations apply, the collection agency should return your account to the IRS. However, first, you may need to let them know that a mistake was made and your account should not have been assigned to the collection agency.

The Three Private IRS Collection Agencies

As of 2025, the IRS contracts with these three collection agencies. Here are their addresses that you can use to write a letter asking for your account to be returned to the IRS. There are also links to their websites with more information.

CBE

P.O. Box 2217
Waterloo, IA 50704
1-800-910-5837

See CBE Group IRS.

ConServe

P.O. Box 307
Fairport, NY 14450-0307
1-844-853-4875

See ConServe IRS Private Tax Collection.

Coast Professional, Inc

P.O. Box 425
Geneseo, NY 14454
1-888-928-0510

See Coast Professional, Inc.

How to Submit a Complaint About a Private Collection Agency

If you think you have been harassed, lied to or victimized by other misconduct, you can report an IRS collection agency for wrongdoing.

Call the Treasury Inspector General for Tax Administration (TIGTA) Hotline at 1-800-366-4484, or
Visit http://www.tigta.gov and report online, or
Write to:

Treasury Inspector General for Tax Administration
Hotline
Post Office Box 589
Ben Franklin Station
Washington, DC 20044-0589

For extreme complaints such as those involving threats or assaults, contact the TIGTA Office of Investigations with responsibility for your local area.

Beware of Scams

Now that PCAs are collecting for the IRS, you must be even more cautious of scams than before. It may be harder to determine if someone is a representative of an IRS collection agency than the IRS itself. However, if you are careful, you can protect yourself. Keep these tips in mind.

Watch out for unusual payment method requests -- legitimate collection agencies will not ask you for a method of payment such as a debit card, an iTunes card, a gift card, or a wire transfer. Instead, they will tell you how you can make electronic payments at IRS.gov, or mail payments made out to the U.S. Treasury directly to the IRS.
Make sure you receive the placement letter -- as noted above, you may receive a phone call first, but you can refuse to talk to the collector until you receive the CP40 notice from the IRS and/or the placement letter from the IRS.
Be aware that threats are a big red flag -- if a caller threatens you with incarceration, a lawsuit, immigration proceedings, or business or driver license revocation, they are a scammer. Neither the IRS nor the private collection agencies will threaten you.
Don't respond to odd contact methods -- Neither the IRS nor IRS collection agencies initiate contact with taxpayers by email, text messages, or social media to try to get information of a personal or financial nature.
Confirm Who Is Calling -- Private collectors are allowed to just identify themselves as IRS contractors when they call you. However, you have every right to ask them which of the private tax collection agencies employs them. And you should! Make sure it is one of the three that work for the IRS.
Check with the IRS -- If you have any doubt that a caller is a representative of the IRS or an IRS collection agency, call the IRS directly.

FAQs about IRS tax debt with private collectors

Can the collection agency garnish my wages?

No, only the IRS can garnish your wages for unpaid taxes. A collector may tell you that the IRS can garnish your wages for unpaid taxes, but if they threaten that the collector may come after your wages, that is a lie and an infringement on your rights.

Can the collection agency send me to jail?

No, if the IRS wanted to pursue legal charges against you, they would refer your account to IRS Criminal Investigation, not to a third-party collector. If a collector threatens to arrest you, that's a red flag and an infringement on your rights.

Can the collection agency give me the same payment plan as the IRS?

Not necessarily. In a lot of cases, the collection agency can only approve a payment plan of up to five years. The IRS, in contrast, can give you longer to pay, and if you have very limited income, the IRS may be able to give you much lower payments than the collection agency.

Can the collection agency settle my tax debt?

No, they cannot. Third-party collectors often have the right to settle consumer debt -- for example, if a collector calls about your credit card bill, they may be able to give you a settlement (where you pay less than owed). However, no collector has the right to do this with tax debt. If you want a settlement, you need to contact the IRS directly to apply.

What if a collection agency is calling about state tax debts?

Some (not all) states use third-party collectors to collect tax debts. Some states outsource tax debt collection almost immediately after you get behind, some wait a few years, like the IRS, and others don't use collectors at all. To determine if a collection agency is legitimately collecting state tax debt, check with your state Department of Revenue to see if they use collectors. Contact them directly if you're not sure. Then, ensure the collector identifies themselves and upholds your rights.

Get Tax Help Now

If an IRS collection agency is assigned to your overdue tax case, any agreement you make with them will have the same weight as an agreement you make with the IRS. So, if you are happy with an installment agreement you work out with a PCA, that’s fine. However, be aware that they may not be presenting you with all payment options, and, in fact, are not authorized to offer you all possible options. You may want to have the account sent back to the IRS and discuss the matter with your own tax expert if a significant amount of money is involved or if you want to apply for a settlement.

To get help now, use TaxCure to find a licensed tax professional with the experience you need.