Will private debt collectors be able to issue tax liens?

A person who has a federal tax debt could face many things. Soon, some such individuals could end up having to deal with private debt collectors.

This is due to a law Congress passed back in 2015. This law put a mandate on the IRS to turn to private debt collectors for certain types of tax debt. The effects of this legislation are about to be felt, as it is expected that IRS use of private tax collectors will begin early next year.

As a note, these collectors will not be used in all instances of delinquent tax debts. Rather, their use will be limited to debts that meet certain requirements. For one, this private tax debt collection will mostly be focused on older debts.

With limited private tax debt collection coming up on the horizon, there are many questions taxpayers might have about such collection. One is: Will private debt collectors have the same powers as the IRS when it comes to tax debts?

The answer to this question is no. For example, such collectors will not have the authority to issue tax liens.

However, this does not mean that a taxpayer that the IRS assigns a private debt collector to over a tax debt won’t face any tax lien issues. For while they won’t be getting a tax lien from the private collector, they might have one against them directly from the IRS. For example, the IRS might put a lien in place before sending the debt onto a private collector. An important thing to note is that, in such a situation, a taxpayer would have to deal directly with the IRS, not with the private collector, when it comes to getting the lien removed.

Whatever circumstances tax lien issues arise in, how the issues are dealt with can have major ramifications for a taxpayer, both in the present and the future. So, promptly contacting a lawyer skilled in tax lien matters can be a wise move when such issues come up.

Source: Accounting Today, “Here Come the Private Tax Debt Collectors … Again,” Jim Buttonow, Sept. 20, 2016