Background

The IRS began using private collection agencies after Congress required the agency to reinvigorate collection of certain older, inactive receivables (the Fixing America’s Surface Transportation Act, 2015). The program was restarted in the late 2010s with private firms under contract to collect eligible federal tax debts while the IRS retains oversight. (See IRS: “Understanding IRS Private Debt Collection”).

How the PCA process works (step-by-step)

  • Selection and assignment: The IRS identifies eligible accounts and assigns them to a contracted PCA. The IRS will notify you by mail before it refers your account to a PCA.
  • PCA contact: The PCA may send letters and call to discuss your balance and options. They must identify themselves, provide contact details, and explain the debt.
  • Negotiation and reporting: PCAs can accept payments and discuss payment arrangements within IRS-approved parameters. They do not make independent enforcement decisions; the IRS retains final authority over liens, levies, and penalty abatements.
  • Case return or resolution: If a case can’t be resolved by the PCA, it returns to the IRS for further action.

What PCAs can and cannot do

Can:

  • Contact you by mail, phone or other reasonable means to collect assigned balances.
  • Accept payments and discuss IRS-approved repayment options.
  • Provide information about your account and collection alternatives.

Cannot:

  • Levy your bank account or wages or seize property (only the IRS can levy or seize).
  • File lawsuits or criminal charges.
  • Change your tax liability; only the IRS can determine tax owed or grant certain reliefs.
  • Ignore taxpayer privacy and security rules (they are bound by federal confidentiality requirements).

Key taxpayer rights and protections

  • Verification: You can verify the assignment by checking IRS.gov or calling the IRS. The IRS states it will notify taxpayers before assignment and provides guidance on verifying a PCA contact (IRS, “Understanding IRS Private Debt Collection”).
  • Continued IRS access: You may request the IRS handle your case directly. Requesting direct IRS contact does not erase the debt but may shift communication back to IRS personnel.
  • Taxpayer Bill of Rights: You retain fundamental protections—be informed, be heard, and expect professionalism—during PCA contact. (See our article on the Taxpayer Bill of Rights.)
  • Taxpayer Advocate Service (TAS): If you face delays, system errors, or immediate financial hardship, TAS is an independent service that can help. (See our guide to the Taxpayer Advocate Service.)

In-practice tips (from my experience advising clients)

  • Always verify before you pay. Scams pretending to be PCAs are common. Confirm the PCA and assignment via IRS.gov or by calling the IRS at the published phone numbers on IRS.gov.
  • Get everything in writing. Ask the PCA to confirm payment terms, amounts, and how future contacts will be handled.
  • Don’t share more than necessary. Never give bank or account details to a caller you cannot verify. If you’re unsure, request a written notice and verify the PCA identity through the IRS.
  • Explore options with a tax professional. PCAs can negotiate within IRS rules, but some resolutions (like offers in compromise or penalty abatement) often require IRS approval.

Common taxpayer mistakes

  • Treating every caller as legitimate. Scammers use threats and spoofed caller ID—verify first.
  • Assuming PCAs have full enforcement power. They are collectors, not the IRS: they cannot levy or litigate.
  • Failing to document communications. Record dates, names, and the content of calls or letters—this helps if the case returns to the IRS.

Real-world example

A client received repeated calls from a firm claiming to be a PCA. We verified the assignment on IRS.gov, confirmed the firm’s identity, and negotiated a manageable installment plan that the PCA submitted to the IRS for approval. The client avoided panic payments to a potential scammer and preserved options for an IRS-managed resolution.

Frequently asked questions

Q: How will I know a PCA is authorized by the IRS?
A: The IRS will mail you a notice before referring the account to a PCA. You can verify an assignment on IRS.gov or by calling the IRS. Never rely solely on an unsolicited phone call.

Q: Can a PCA seize my assets?
A: No. Only the IRS can issue levies, file federal tax liens, or take legal enforcement actions.

Q: Can I work directly with the IRS instead of a PCA?
A: Yes. You can request that the IRS resume direct contact. That request doesn’t remove the debt but may transfer communications back to IRS staff.

Where to get authoritative help

Internal resources

Professional disclaimer

This article is educational and does not constitute tax advice. For guidance tailored to your situation, consult a CPA, enrolled agent, or tax attorney. In my practice I’ve helped hundreds of taxpayers verify PCA assignments and negotiate workable resolutions; if you’re unsure, seek professional help.