From 2006 through 2009, the IRS was allowed to enter into contracts with private collection agencies (PCAs) to assist in the collection of delinquent federal tax liabilities. Beginning September 7, 2006, the IRS began assigning accounts to three private collection agencies (PCAs). Announcement 2006-63 describes the limited role PCAs was to play in collecting back taxes and the legal restrictions and procedures in place to safeguard taxpayer privacy and taxpayer rights.

This program was highly controversial. Many advocacy groups argued against the program. Eventually Congress caved to the pressure, and the program was repealed, effective March 6, 2009. The program has now been revived, and in 2017, the IRS has started sending overdue tax accounts to 4 approved PCAs.

The accounts selected to go to the PCAs are ones that the IRS feels are not going to be collectible through the automated systems (no good lien or levy sources), but are small enough that it is not cost effective to assign a Revenue Officer to them. The PCAs contact the taxpayers and arrange for the taxpayer to pay the IRS directly or get into an installment agreement. The taxpayer does not pay the PCA - the taxpayer pays the IRS and the PCA is later paid a percentage from the IRS.

Do you think Congress made the right decision in reviving the IRS from using PCAs?