For most of its history, IRS collection was done by IRS employees. That changed when Congress enacted IRC 6306, which authorizes "qualified tax collection contracts" with private companies. The FAST Act of 2015 went further and made the program mandatory for certain old balances. IRC 6306(c)(1) now says the IRS "shall enter into one or more qualified tax collection contracts for the collection of all outstanding inactive tax receivables."

If you have an old balance the IRS has not been actively working, a private collection agency is a real possibility. Knowing how the program works helps you spot a legitimate contact, avoid a scam, and choose whether to work with the agency or bring the account back to the IRS.

Which debts go to private collectors

IRC 6306(c)(2) defines an inactive tax receivable as an assessed balance in the IRS's potentially collectible inventory that meets one of three tests:

  • at any time after assessment, the IRS removed it from active inventory for lack of resources or inability to locate the taxpayer;
  • more than 2 years have passed since assessment and it has not been assigned to any IRS employee for collection; or
  • it was assigned for collection, but more than 365 days have passed without interaction with the taxpayer or a third party to further collection.

In other words, these are debts the IRS itself was not actively pursuing. IRM 5.1.12.18.4 notes that accounts assigned to a private agency remain in an inactive IRS collection status and are not hardship closures.

Some debts are never eligible, by statute. They include accounts with a pending or active offer in compromise or installment agreement, innocent spouse cases, taxpayers who are deceased, under 18, in a combat zone, identity theft victims, receiving SSDI or SSI as substantially all of their income, or with income at or below 200 percent of the poverty level, and accounts under examination, litigation, criminal investigation, levy or appeal. The full list is in accounts excluded from private collection.

What a private agency is allowed to do

IRC 6306(b)(1) defines the contractor's job narrowly. The agency may:

  • locate and contact the taxpayer the IRS specifies;
  • request full payment of the amount the IRS specifies, and if you cannot pay in full, offer an installment agreement providing for full payment over no more than 7 years; and
  • obtain financial information the IRS specifies.

The 7-year limit was extended from 5 years by the Taxpayer First Act for contracts entered into after July 1, 2019. IRC 6306(b)(2) also prohibits contractors from doing anything IRS employees are prohibited from doing in similar work, and IRC 6306(g) applies the Fair Debt Collection Practices Act to these contracts, except where the tax code supersedes it.

What agencies cannot do is just as important. Publication 4518 says private collection agencies cannot take any type of enforcement action, such as filing a notice of federal tax lien or issuing a levy, though the IRS retains that authority. More detail is in what private collectors can and cannot do.

The notices you should receive

The sequence is designed so you hear from the IRS first. According to IRM 5.1.12.18.3, the IRS sends Notice CP40 for individual accounts (CP140 for business accounts), titled Overdue Account Sent to Private Collection Agency, along with Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency. Then the agency sends its own initial contact letter, and after letters, it may call.

Both the IRS letter and the agency letter contain a taxpayer authentication number. That shared number is the backbone of verification, explained in how to verify a private collection agency.

How the program got here

The statute's history explains its shape. IRC 6306 was added in October 2004 by Public Law 108-357, which authorized private collection contracts. The FAST Act in December 2015 added the mandatory language for inactive tax receivables, created the statutory exclusions, and required annual reports to Congress. The Taxpayer First Act in July 2019 changed the definition of an inactive receivable to the current two-year test, added the SSDI, SSI and low-income exclusions, and lengthened the maximum payment period from 5 to 7 years.

Each change narrowed or clarified who the contractors may contact and what they may offer. The direction of travel has been toward more protection for low-income taxpayers and clearer limits on the contractors, not toward broader authority. For a taxpayer, that history is a reminder to check the current statute and the current IRS page rather than relying on older articles about the program.

Congress keeps score

IRC 6306(j) requires the Treasury to report to the House Ways and Means Committee and the Senate Finance Committee within 90 days after each fiscal year. The annual report covers the number and amount of receivables given to each contractor, amounts collected and installment agreements made, collection costs, the effect on unpaid assessments, the fees retained, and a disclosure safeguard report. Every other report must also include an independent evaluation of contractor performance and a comparison of contractor practices with IRS techniques.

The agencies currently in the program

The IRS private debt collection page, last reviewed August 21, 2026, lists three agencies with their phone numbers:

  • CBE Group Inc., 800-910-5837
  • Coast Professional, Inc., 888-928-0510
  • ConServe, 844-853-4875

The list can change when contracts change. Check the IRS page directly rather than relying on a number from a caller.

Where your money goes

Publication 4518 is direct: make all payments to the IRS. The agency can explain ways to pay, including IRS electronic options. Checks and money orders are made payable to the United States Treasury, with your name, Social Security number and tax year written on the payment, and the agency provides the IRS mailing address.

You may wonder whether paying through this program costs more. IRC 6306(e) lets the IRS retain up to 25 percent of amounts collected to pay for the contracts and up to 25 percent for a special compliance personnel program, but it also says the amount credited as paid by the taxpayer is determined without regard to those retentions. Every dollar you pay is credited to your account.

Publication 4518 also lists the ways to pay, including IRS Direct Pay from a checking or savings account at no cost, preauthorized Direct Debit, the Electronic Federal Tax Payment System, and card payments through a processor that charges a fee. Paying through an IRS channel gives you an IRS confirmation, which is the record you want if the payment ever needs to be traced.

You can choose to deal with the IRS instead

Working with the agency is not mandatory. Publication 4518 says if you do not wish to work with the assigned agency, you must submit that request in writing to the agency. IRM 5.1.12.18.5 says taxpayers may request their account be returned to the IRS at any time after assignment, that the request goes to the agency, and notes the Fair Debt Collection Practices Act requires a cease-contact request to be in writing.

There are also automatic routes back. IRM 5.1.12.18.4 says that receipt of a processable offer in compromise returns the account to IRS assignment. And under IRC 6306(i), taxpayers affected by a federally declared disaster may request relief from immediate collection by a contractor and return of the account to the IRS.

Should you work with the agency or the IRS?

For a straightforward balance you can pay over time, an agency payment arrangement may be convenient. But it has limits. IRM 5.1.12.18.4 says a payment arrangement with a private agency is not an installment agreement under IRC 6159. The agency cannot evaluate an offer in compromise or a hardship determination, which are IRS decisions. If you need one of those, or if your situation is complicated, the IRS is the right place.

The firm's main site has an overview of IRS installment agreements for comparison. A private collector calling about an old debt is not an emergency in the way a levy is. It is a decision point. Verify the call, then choose the forum that fits your situation.