The IRS May Consult a Ten-Year-Old Tax Return to Decide Whether to Exclude Your Account From Its Private Debt Collection Program

Since 2015, Congress has required the IRS to enter into contracts with private debt collection agencies (PCAs) to collect unpaid tax liabilities from taxpayers the IRS does not have the resources to collect. In 2019, as part of the Taxpayer First Act (TFA), Congress amended the law to bar the IRS from assigning the tax debts of low-income taxpayers to PCAs. Specifically, the TFA directs the IRS to exclude the debts of taxpayers with adjusted gross incomes (AGIs) at or below 200 percent of the federal poverty level from PCA assignment. This requirement took effect on January 1, 2021, and its intent to protect low-income taxpayers was straightforward and set forth in the accompanying House Ways and Means Committee report. The provision aimed “to protect such taxpayers from entering into payment plans they cannot afford.”