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IRS Announces New Way to Pay Tax Bills That Have Gone to Private Collections

IRS Announces New Way to Pay Tax Bills That Have Gone to Private Collections

IRS Announces New Way to Pay Tax Bills That Have Gone to Private Collections

IRS Stresses Convenience of New Payment Method

Taxpayers whose outstanding tax bill has been referred to a private debt collector have a new way to pay, according to a recent IRS press release.

The IRS launched the private debt collection program following the passage of the 2015 Fixing America’s Surface Transportation (FAST) Act, which—according to a TIGTA audit—”required the IRS to begin using private collection agencies (PCA) to collect inactive tax receivables.” This latest incarnation marks the third time Congress has attempted such a program.  

The latest development in the private collections program seems to emphasize convenience: PCA-referred tax debt can now be paid by preauthorized direct debit. Previously, taxpayers who had been contacted by a PCA would make payments by mailing a check directly to the Treasury or using the online payment tool on IRS.gov. That hard separation between the collection agency and making payments could make setting up the new payment option a little confusing since taxpayers have to schedule direct debit payments through the PCA.

The IRS said that taxpayers interested in using direct debit must first send a signed letter of permission to their collection agency “[containing] the payment schedule and bank account information.” Here is the contact information for the PCA partners listed on the IRS.gov “Private Debt Collection” page:

  • CBE
    O. Box 2217
    Waterloo, IA 50704
    800.910.5837
  • ConServe
    O. Box 307
    Fairport, NY 14450
    844.853.4875
  • Performant
    O. Box 9045
    Pleasanton, CA 94566
    844.807.9367
  • Pioneer
    PO Box 500
    Horseheads, NY 14845
    448.3531

After receiving a confirmation letter, taxpayers can begin coordinating payments with the PCA by phone. While direct debit promises to be a convenient way to resolve tax debt, officials warn that scammers might try to take advantage of taxpayers.

Scammers May Try to Impersonate Private Collection Agencies

When the program was first announced, TIGTA worried that scammers would try to impersonate PCAs. The IRS reiterated those concerns in this press release, emphasizing the importance of learning to spot fraud.  

A common scammer tactic is to ambush victims with angry phone calls demanding payment and threatening jail time. That’s why the IRS reminded taxpayers that they will not make demands or issue threats over the phone.

Moreover, contact from a PCA should not come as a surprise. The IRS initiates the process by sending a letter containing Notice CP40 and Publication 4518 to explain the situation, and the PCA follows up with an official letter of their own.

“Both letters will include a Taxpayer Authentication Number (TAN),” the IRS said. “The TAN will be used to authenticate the PCA and to verify the identity of the taxpayer, instead of using their Social Security Number.”

Finally, the IRS said that anyone who suspects they’re the target of a scammer should report the incident to TIGTA at Treasury.gov/TIGTA or 800.366.4484.

Sources: IR-2019-165, “Private Debt Collection,” Audit Report 2018-30-052

Story provided by TaxingSubjects.com

IRS Marks National Work and Family Month

IRS Marks National Work and Family Month

IRS Marks National Work and Family Month

October is National Work and Family Month, and to celebrate, the IRS is issuing informative tips on the work-life balance. Topics include family businesses, family tax credits, military tax benefits, scams and security issues.

National Work and Family Month was established by a 2003 Senate resolution. October was chosen to help communicate and celebrate progress towards creating more flexible work environments and helping Americans better balance their work-life commitments.

Employer Credit for Paid Family and Medical Leave

This credit highlights the spirit of National Work and Family Month. Eligible employers who provide paid family and medical leave to their employees in 2019 may qualify for a business credit. An employer must have a written policy to qualify. The policy should provide:

  • At least two weeks of paid family and medical leave annually to full-time employees, prorated for part-time employees.
  • Family and medical leave pay that is at least 50% of an employee’s wages.

For tax years 2018 and 2019, the worker must earn $72,000 or less to qualify. The credit ranges from 12.5% to 25% of wages paid to qualifying employees. Some employers, the IRS says, may be eligible to claim the credit retroactively.

Wages qualifying for the credit should have been paid in tax years beginning after Dec. 31, 2017, and before Jan. 1, 2020. Tax year 2019 is generally the last year most employers can claim this credit.

Family and Medical Leave Act

FMLA traces its roots back to 2003 and requires covered employers to provide employees with job-protected and unpaid leave for qualified medical and family reasons. The law specifies certain types of employees who qualify for up to 12 weeks of unpaid, job-protected leave per year. During the leave period the employee’s group health benefits are also protected.

FMLA is designed to help employees balance their work and family responsibilities by allowing them to take reasonable unpaid leave for specific family and medical reasons.

For more information, check out “Employer Credit for Paid Family and Medical Leave,” available at IRS.gov. Other resources include the “Highlights of Tax Reform for Businesses” and “Employers may Claim Tax Credit for Providing Paid Family and Medical Leave to Employees” web pages.

Story provided by TaxingSubjects.com

IRS Tax Tip Addresses Extension Deadline

IRS Tax Tip Addresses Extension Deadline

IRS Tax Tip Addresses Extension Deadline

IRS to Taxpayers: Don’t Miss Next Week’s Filing Deadline!

The IRS this week reminded taxpayers that the filing deadline for those with a tax extension is Tuesday, October 15, 2019.

Generally, taxpayers who request an extension are given an extra six months to file their tax return with the IRS. While most tax extensions will need to be filed by October 15, the IRS noted in their tax tip that there are some exceptions—highlighting two groups in particular: members of the military and natural disaster victims who meet certain requirements.

Military members returning from combat zones usually have an extra 180 days to file and pay. The areas recognized as combat zones for the purposes of this extension and other requirements can be found on the IRS “Combat Zones Approved for Tax Benefits” web page.  

Taxpayers with a residence or business in a federally-declared disaster area may also qualify for tax relief, which generally means extra time to file their tax return and pay their tax bill. While disaster-related tax relief is automatically applied to qualifying taxpayers, taxpayers who aren’t sure about their status can contact the IRS. Recent tax-relief announcements and resources can be found on the IRS “Tax Relief in Disaster Situations” and “FAQs for Disaster Victims” pages.  

The release also reminded extension filers about the new Form 1040 for tax year 2018, how they can pay any tax owed, and the benefit of tax planning for tax year 2019.

When it comes to the new Form 1040, the IRS said, “[It] consolidates Forms 1040, 1040A, and 1040-EZ into one form that all individual taxpayers will use to file their 2018 federal income tax return.” To assuage worries about needing to learn updated forms (like the new Schedules 1 through 6), the agency said that tax software tends to make the transition “seamless.”

A major misconception about getting a tax extension is that it also gives taxpayers more time to pay tax owed. Every year, the IRS reminds taxpayers that the deadline for payment remains April 15 (unless a federal holiday bumps Tax Day), and that any delay in submitting payment can mean owing penalties and interest.

To help taxpayers get square with the IRS, the agency provided links to several online resources for those who still need to pay their tax year 2018 taxes:

The IRS said that taxpayers can check their account on IRS.gov for more information about their tax situation: “[Taxpayers can] view their balance, payment history, pay their taxes, and access tax records through Get Transcript.”

Finally, the IRS recommended that taxpayers perform a “Paycheck Checkup” before the end of the year. Many taxpayers found that they owed a surprise tax bill when they filed their tax year 2018 return due to Tax Cuts and Jobs Act-related changes in withholding. They said that there’s still time to avoid a similar situation on their tax year 2019 return.

The updated Tax Withholding Estimator on IRS.gov can help taxpayers discover if they need to withhold more money from their paychecks—though “taxpayers should have their 2018 tax return available when using the tool.” That means filing an extension return on time will help taxpayers better prepare for next filing season.  

Source: IR-2019-163

Story provided by TaxingSubjects.com