§6306 Qualified Tax Collection Contracts

Summary

The Secretary of the Treasury may hire private contractors to collect certain unpaid federal taxes. These contractors must be outside the Treasury. They must find and contact specified taxpayers, ask for full payment or offer an installment plan that pays the debt in full within up to 7 years, and collect financial information the Secretary requires. Contractors cannot do things that IRS employees are barred from doing. Subcontractors cannot contact taxpayers, do quality checks, or write collection notices unless the Secretary approves them. The Secretary may keep up to 25 percent of amounts collected to pay contractors and another up to 25 percent to fund a special compliance account. The government is not liable for contractors’ actions. The Fair Debt Collection Practices Act applies except where other tax rules override it. The Secretary must use private collectors and debt centers on the schedule and with the technology required by law. Taxpayers affected by a federally declared disaster may ask contractors to stop collection and have their case returned to IRS employees. “Inactive tax receivable” means a tax debt moved out of active IRS work because of lack of resources or inability to find the taxpayer, or a debt not assigned to an IRS employee more than 2 years after assessment, or one assigned but with no contact for more than 365 days. “Tax receivable” means an outstanding assessment in potentially collectible inventory. Debts are not eligible for private collection if there is a pending offer-in-compromise or installment plan, an innocent spouse claim, the taxpayer is deceased, under 18, in a combat zone, a victim of tax identity theft, largely on disability or SSI, has adjusted gross income at or below 200 percent of the poverty level, is under exam, litigation, criminal investigation, levy, or is exercising a proper appeal right. The Secretary must report to Congress each year (within 90 days after the fiscal year ends) with data on amounts sent to contractors, amounts collected, costs, effects on IRS collections, fees kept and how used, and disclosure safeguards; and starting with the second report, include biannual independent contractor evaluations and a plan comparing private and IRS collection practices. Other tax rules cover damages and taxpayer assistance orders for contractor actions.