IRS Starts New Private Third Party Debt Collection Program

You may have received a weird letter from the IRS.  Is it a scam? How did this company get personal information about your back IRS tax balances? In December of 2015, Congress passed into law the use of third party debt collectors to collect old uncollected tax debt.

The IRS contracted with four different third party debt collectors to start the new Private Debt Collection Program. The new program authorizes third party debt collectors to collect outstanding inactive taxes for the government. The collecting agencies will be working on accounts that the IRS is no longer working on, but the taxpayer still owes back taxes. The factors for hiring four outside contractors to collect money are older, overdue taxes, and/or lack of resources for the IRS to continue working the case.

IRS Hires Four Third Party Debt Collection Companies

The four collection agencies are:

P.O. Box 2217
Waterloo, IA 50704

P.O. Box 307
Fairport, NY 14450-0307

P.O. Box 9045
Pleasanton CA 94566-9045

PO Box 500
Horseheads, NY 14845

Letter from IRS Notifying of Collection Company

Because there are many different “Tax Scams” going around, the IRS is doing whatever they can to avoid confusion. The IRS will send effected taxpayers a letter about the account transfer. Then the private collection agency will send another letter about the transfer of debt collection from the IRS to the third party collector. If the taxpayer has a representative assisting them on the back tax balances, the representative will receive a copy of both the IRS letter and the agency’s follow up letter.

Your letter from the private collection agency will have certain information on it such as: Toll free telephone number to call with questions and your right to contact the Taxpayer Advocate Service. The letter may contain information on the different ways to pay outstanding and include explanations on how to notify the private collection agency if the taxpayer disputes the legitimacy of the debt or any portion of the debt.

Here is real an example of a letter from ConServe.

Third Party Collector Letter

IRS. “New Private Debt Collection Program to Begin next Spring; IRS to Contract with Four Agencies; Taxpayer Rights Protected.” IRS. N.p., n.d. Web. 1 June 2017.

How to Handle the Inevitable Stress of Tax Season

Picture for articleIt’s springtime, and you know what that means. Birds are chirping, flowers and blooming, and you’re staring at your W-2s. Tax season is an inevitable part of life, and so is the stress that comes with it. If you know how to help yourself, however, you can mitigate the stressful effects of reporting your income to Uncle Sam. Here are some ways to handle the stress of tax season.

Know your best option for help

Many of us will seek help when preparing our taxes – whether it’s in the form of online preparation software (or W-2 or 1099 software if you own a business), a professional tax preparation service, or a friend or family member.

If you’re looking for a professional, make sure you ask about their credentials. Also opt for services that have a set fee – not ones that base their fee on the size of your tax return.

“Bigger isn’t always better. Be wary of tax preparation services that promise larger refunds than the competition, and avoid tax preparers who base their fee on a percentage of your refund,” says the Better Business Bureau. “Look for credentials. Ideally, your tax preparer should either be a certified public accountant, a tax attorney, an enrolled agent or a certified E-file provider. Also ask if they belong to any professional organizations or attend continuing education classes.”

If you make less than $54,000 a year, are elderly, or have trouble speaking English, the IRS has free programs to help you out.

Take steps to prevent scams and theft

One of the worst things about tax season is that it really brings out the criminals. In order to help yourself thwart their attempts, you should always make sure your internet connection is secure when e-filing. File early so thieves are unable to steal your social security number to file a fake return. Shred extra tax documents (after you organize and store what’s necessary).

Also, be aware of potential scams. Scammers can call, claiming to be the IRS, a certified tax preparer, or a charitable organization looking for tax info. Be aware that the IRS will never contact you by telephone or email – always by snail mail. If you feel you’ve been the target of a scam, contact the authorities.

Pay it forward

No, don’t pay more than you must to the IRS. Pay it forward to yourself, for next tax season. Think about what you can do this year to make next year’s filing easier. Most of the time, this starts with organization. Hang on to all relevant tax documents and set up a system for filing the new ones that come your way throughout the year.

“Start the year off right by putting all tax related documentation in a file folder. Each time you get a receipt or document to be used for your tax filing, place it into the folder. Consider keeping a master list of all items in your folder,” says Alt-Creative. “You will thank yourself later when you go to gather your tax documents next year and everything you need is conveniently located in one place. Instead of spending hours preparing documents for your tax professional, you can simply grab your folder and go.”

Take some time to de-stress

Money is stressful. There’s no getting around this. If tax season has you feeling the weight of the world, take a break and de-stress before jumping back in. Take your dog for a walk, do some yoga, or close your laptop, put away your documents, and practice some stress-relieving meditation. Have a beer. There’s no reason you have to stress yourself out this tax season. Start early enough that you can take your time.

Photo Credit:

Author: Julie Morris

Two Good Reasons for Filing Your Taxes Early

It’s tax time! This year personal tax returns are due on April 18, 2017. In January and February, you will start to receive tax documentation needed to prepare your tax returns. At this point, you may be saying to yourself, “I have plenty of time between now and April 18th to get my taxes done.” While this is true, consider the following two good reasons for completing and filing your taxes early.

Reason #1 – Tax professionals are less busy

If you hire a tax professional to prepare your taxes, tax professionals are significantly less busy at the beginning of the tax season compared to the end of the tax season.

The peak of the tax season will be between March 15th and April 18th. During this time, tax professionals will work long hours to get all tax returns completed by the due date. It’s a crazy time. However, at the beginning of the tax season, tax professionals will start to get busy but not nearly as busy. Your tax preparer will have more time available to meet your needs compared to later in the tax season.

Reason #2 – Identity theft and fraudulent tax returns

This reason is a more important reason to file your taxes early. Consider this situation.

– Your name, birth date and social security number are, unknowingly, stolen
– The scammer electronically files a fraudulent tax return showing a large refund
– The IRS processes the tax return and deposits the refund into the scammer’s financial institution
– Your taxes are prepared and you file your tax return electronically
– The IRS rejects your tax return because the IRS says you already filed a tax return

What can you do now? There are procedures to notify the IRS of the identity theft. This includes paper filing your tax return with Form 14039, Identity Theft Affidavit. Click here more information. It will take the IRS approximately 6 to 8 months to clear up the situation and process your tax return. This includes waiting for a long time to get your tax refund.

However, if you filed your tax return early, then your tax return will be filed first. The fraudulent tax return filed by the scammer will be filed after yours and, therefore, will be rejected by the IRS.

The risk of identity theft has increased over the years. Over past two tax seasons, we’ve had at least one client fall victim to identity theft. Both of these clients provided us their tax information in April and their tax returns were filed right around April 15th. Their tax returns were rejected because a fraudulent tax was already filed.

Related Identity Theft Stories

The IRS was hacked several times over the past two years.
IRS Hacked Again and Tax Scams Continue

Then there was the major hack at Michigan State University where student data was stolen, this includes current students and Michigan State alumni.
Michigan State University Hacked, Student Data Stolen

Important 2017 IRS Due Dates

New for 2017 are some changes to the due dates for various tax returns.  For example, partnership tax returns are due on March 15 instead of April 15.  Also, a couple of the due dates fall on a holiday and/or weekend.  When this happens, the due date is the next business day.

January 23, 2017

Tax season starts.  The IRS will start accepting and processing tax returns on this date.

January 31, 2017

– Form W-2, Wage and Tax Statement; and

– Form 1099-MISC, Miscellaneous Income.

The due dates for Form W-2 and Form 1099-Misc includes filing necessary forms to the recipient, IRS and Social Security Administration.  The requirements for filing these two forms were slightly different in previous years.

February 15, 2017

Tax refunds due to Earn Income Tax Credit or Additional Child Tax Credit will be held until this date.  A new law was put in place requiring the IRS to hold the refunds.

March 15, 2017

– Form 1065, U.S. Return of Partnership Income; and

– Form 1120S, U.S. Income Tax Return for S Corporation Return.

In previous years, partnership returns were due on April 15.

April 18, 2017

April 15 falls on a weekend in 2017 and Monday April 17 is Emancipation Day.  Therefore, tax returns are due on Tuesday, April 18, 2017.

– Form 1040, U.S. Individual Income Tax Return;

– Form 1041, U.S. Income Tax Return for Estates and Trusts;

– Form 1120, U.S. Corporation Income Tax Return;

– Form 1040-ES, Q1 Estimated Tax for Individuals; and

– Form 1120-W, Q1 Estimated Tax for Corporations.

New this year, Form 1120 Corporation returns are due in April instead of March.

June 15, 2017

– Form 1040-ES, Q2 Estimated Tax for Individuals; and

– Form 1120-W, Q2 Estimated Tax for Corporations.

September 15, 2017

– Extended Form 1040, U.S. Individual Income Tax Return;

– Extended Form 1041, U.S. Income Tax Return for Estates and Trusts;

– Extended Form 1120, U.S. Corporation Income Tax Return;

– Form 1040-ES, Q3 Estimated Tax for Individuals; and

– Form 1120-W, Q3 Estimated Tax for Corporations.

October 2, 2017

– Extended Form 1041, U.S. Income Tax Return for Estates and Trusts

December 15, 2017

– Form 1120-W, Q4 Estimated Tax for Corporations

January 15, 2018

– Form 1040-ES, Q4 Estimated Tax for Individuals

Fake IRS Tax Bill Scam

The IRS issued a warning about fake IRS tax bills being mailed to taxpayers.  Scammers have created a fake version of a real notice used by the IRS, Notice CP2000.  We suggest using our IRS Letter Decoder to check the authenticity of the letter you may have received before responding.  Continue reading…

Free eBook on First Time Penalty Waiver

You made a mistake by either filing your tax return late or paying taxes late. As a result, the IRS charged you penalties. The penalties charged by the IRS can be significant. If this was your first time making this mistake, you may qualify for First Time Penalty Waiver. Continue reading…