Help! I Got CP140! The IRS Is Sending My Bill to Collections
If you’ve had an unpaid tax bill for quite a while, you may have thought that the IRS forgot about it. However, the IRS never forgets about tax bills, and because the agency only has about 10 years to collect most tax debts, you often see a flurry of collection activity right before this deadline.
In particular, you may get a notice that the IRS has assigned your tax debt to a private collection agency. Note that this doesn’t always take nearly a decade. Typically, the agency sends out these notices if it hasn’t heard from you or your tax rep for over a year and the tax debt is at least two years old.
Since 2015, the IRS has used several different third-party collectors to collect tax debts. If the agency sends your account to one of these collectors, it will notify you with Notice CP40 or CP140. Here’s an overview of what to expect if this happens.
What Is IRS Notice CP140?
CP140 means that the IRS has referred your tax debt to a third-party bill collector. You can call the collection agency using the phone number or the notice, or you can wait for them to call you. In either case, save your notice. It has a code that you will use to verify the collection agency.
Two-Party Verification With Third-Party Collections
Sadly, tax scams are pretty common, and to protect yourself, you need to use two-party verification when talking to a third-party collector. Your CP140 notice will have a 10-digit code at the top of the letter. When you talk with the collector, you will verify your identity by reading off the first five numbers. Then, they will verify their company by telling you the last five letters.
Do not talk to anyone who claims to be collecting a debt for the IRS but doesn’t have these numbers. Be especially leery if the person on the phone demands immediate payment right now or threatens to take immediate legal action. If you’re unsure, hang up, call the IRS directly, and ask if a collector has been assigned to your case.
What Collection Agencies Collect IRS Tax Debts?
As of 2023, the IRS only works with the following three collection agencies:
- CBE Group Inc
- Coast Professional, Inc
Keep in mind that this list is subject to change if the IRS contracts new agencies. Again, you should contact the IRS directly if you’re unsure about a call or letter that appears to be from a collection agency.
What to Do if You Receive Notice CP140
If you receive this notice, you can call the collection agency directly to set up monthly payments. Collectors have the ability to set you up with payment plans for up to seven years. They cannot charge a fee for the payment plan.
However, if you want another tax relief option, you need to contact the IRS directly. You can only apply for offers in compromise, partial payment installment agreements, and currently non-collectible directly through the IRS. You also need to call the IRS if you want penalty abatement or to request innocent spouse relief. A private collector cannot help with any of these options.
Unsure of the best option for your situation? If you can afford monthly payments, you may want to take that route. If you cannot afford monthly payments, need help planning for future tax liabilities, or have other complicating factors, you may want to reach out to a tax attorney for guidance.
When Does the IRS Use Private Collectors?
The IRS generally only uses private collectors on debt that has not been paid for at least two years or in cases where the agency cannot find you. The IRS is not allowed to send everyone’s debts to third-party collections. If one of the following apply and you get a third-party collection letter, contact the IRS immediately and let them know that your account should not be with an outside collector:
- You’re under the age of 18.
- The tax debt is for a deceased person.
- You are in a combat zone.
- You’re the victim of tax ID theft.
- You receive SSI or SSDI.
- Your adjusted gross income (AGI) is less than 200% of the poverty line.
- You’re currently under criminal investigation or facing a tax levy.
- You’re being audited or are under examination.
- You’re making payments on an installment agreement.
- You’ve applied for innocent spouse relief.
- You live in a federally declared disaster area.
FAQs About Private Tax Debt Collection
Private debt collection of tax bills is a bit complicated. To help you understand more, here are some common questions and answers.
What Is www.irs.gov/cp140?
This is a short URL that takes you to the IRS’s web page about Notice CP140. The IRS prints these web addresses on most of its notices so that you can look up more details about the notice.
Can a private collector initiate a tax lien or levy?
No, private tax collectors cannot initiate tax liens or levies. If a collector says they are filing a lien or planning to seize (levy) your assets, contact the IRS and report the situation.
Who should you make payments out to for private collectors?
Even if a third-party collector is working on your case, you will still make your payments out to the US Treasury. If the collector requests payments to another party, do not pay them. Be especially careful if the collector requests an unusual payment method such as gift cards, iTunes cards, or wire transfers to a foreign bank account. That’s a big red flag of a tax scam.
How do you tell if a private collector is really a scammer?
Some scammers pose as private debt collectors. If you don’t owe a tax debt, a private collector will not call you, and if someone does, they are likely to be a scammer. Also, all legitimate collectors will be able to verify your identity with the codes found on the CP140 or CP40 notices.
What if I don’t want to work with a private debt collector?
Send a letter to the private debt collector using the address on your CP140 or CP40 notice. Then, tell them that you want your account returned to the IRS.
What is the difference between CP140 and CP40?
Both of these notices are sent to taxpayers whose tax debts have been assigned to private collectors. The IRS’s web pages about these notices have nearly identical information. The IRS hasn’t published any details on the differences between these notices.
Get Help With Private Collection of Tax Debt
Dealing with the IRS can be stressful, but a private collection agency can be even worse. If your account has been assigned to a private collector, we can help. At the W Tax Group, we offer nationwide representation to people with tax problems.
Whether you want help setting up payments, applying for a tax relief program, or anything else, we look forward to serving you. To learn more and to get help now, contact us today for a free consultation.