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The Internal Revenue Service announced that it is beginning in the spring with private collection of federal tax debts. The new program enables designated contractors to collect on the government’s behalf, outstanding tax receivables. These designated contractors will work on accounts where taxpayers owe money, but the IRS due to budget stresses is not able to work the cases.

The IRS asserts it will do everything it can to help taxpayers avoid confusion and to understand their rights and tax responsibilities, particularly in light of the continual phone scams where callers impersonate IRS agents and threaten taxpayers to extract immediate payment.

Private collection agencies will not ask for payment on a prepaid debit card. If taxpayers are threatened on the telephone to provide a prepaid debit card number, you should contact Tax Crisis Institute immediately. The caller is a scam and is not an authorized private collection agency. Taxpayers who receive such calls are encouraged to go to for information including the “Tax Scams and Consumer Alerts” page.

This is no doubt going to be very confusing for taxpayers, as many people are receiving scam phone calls from out-of-the-country callers, pretending to be IRS agents and making overt threats. Until now, we’ve been able to tell worried callers that the IRS does not call and threaten you, but with this change, they will. Will citizens really be able to differentiate between the scammers and the real thing anymore?

The IRS attempted a similar collection process several years ago and it was a resounding failure. We’ll have to wait and see if history repeats itself.

Enjoy your holidays.