Last Friday, President Obama signed the Fixing America’s Surface Transportation Act, or “FAST Act” into law. Part of the FAST Act is an order for the IRS to hire private collection companies to help to track down US taxpayers who owe the agency for back taxes, penalties and interest.
While the IRS has been given the authority to use outside collection agencies in the past, it has not effectively done so. The new law orders the IRS to use private debt collection companies to collect “inactive tax receivables,” changing this from an optional strategy to a requirement.
“Inactive tax receivables” are defined as:
- Removed from the active inventory for lack of resources or inability to locate the taxpayer;
- For which more than 1/3 of the applicable limitations period has lapsed and no IRS employee has been assigned to collect the receivable; or
- For which, a receivable has been assigned for collection, but more than 365 days have passed without interaction with the taxpayer or a third party for purposes of furthering the collection.
This new law extends the power of the IRS to aggressively pursue collections and to use external companies to track down taxpayers the agency is currently unable to find or pursue. This should substantially increase the number of IRS collection cases involving wage garnishments, bank levies, and liens issued by the IRS.
If you own a business or are facing bank levies or wage garnisment by the IRS we invite you to contact our office for a free consultation at 866-631-3470.