§6306 Qualified tax collection contracts

Summary

Lets the IRS hire private companies to collect certain unpaid federal taxes. The companies cannot be Treasury employees. Their job is to find and contact taxpayers the IRS names, ask for full payment, offer an installment plan up to 7 years if the taxpayer cannot pay at once, and get the financial information the IRS asks for. Contractors must follow the same rules that IRS employees must follow when doing similar work. Subcontractors are not allowed to contact taxpayers, do quality checks, or write collection notices, and any other subcontractor work needs the IRS head’s approval. The IRS must hire one or more contractors to work on "inactive tax receivables." Those are debts removed from active work because of lack of resources or inability to find the taxpayer, debts more than 2 years after assessment that were never assigned to an IRS employee, or debts assigned but with no contact for more than 365 days. Certain accounts cannot be sent to contractors, including ones with pending offers or installment plans, innocent spouse cases, deceased or under-18 taxpayers, people in a combat zone, victims of tax-related identity theft, people whose income is mostly disability or SSI, taxpayers with adjusted gross income at or below 200 percent of the poverty level, or any case under examination, litigation, criminal probe, levy, or appeal. The IRS may keep up to 25 percent of what a contractor collects to pay contractor costs and up to another 25 percent to fund a special compliance program. The United States is not liable for actions by these contractors. The Fair Debt Collection Practices Act applies unless other IRS rules override it. The IRS must use existing private collection contractors and debt collection centers and their technology when appropriate. Taxpayers affected by a declared federal disaster can ask for relief from contractor actions and to have their account returned to the IRS for collection by an employee. Within 90 days after each fiscal year ends, the IRS head must report to Congress on contractor activity, collections, fees kept, and related information, and every two reports must include an independent contractor performance review and a plan comparing contractor methods to IRS methods. For rules on damages for wrongful contractor actions and on taxpayer assistance orders for these contractors, see sections 7433A and 7811(g).