A caller who says an old tax bill has been handed to a collection agency is not automatically lying. The IRS really has contracted with a small number of outside firms to work certain overdue accounts, and one of them may be the voice on the other end of the line. What that caller cannot do is where households get confused, and it is also where scammers build their entire pitch. Under the government’s own rules for the program, a private collector has no power to place a lien, freeze a bank account, or take a single dollar without the IRS acting first.
The Three Companies Currently Under IRS Contract
The IRS publishes the names of every company it authorizes to collect on its behalf, and only three firms currently hold that authority: CBE, Coast Professional, Inc. and ConServe, according to the agency’s private debt collection FAQ page, reviewed by the IRS as recently as July 2026. That roster has held steady since September 2021, when Coast Professional joined the program and two earlier contractors, Performant and Pioneer, rotated off. A caller who names a company outside that short list, or who cannot say which of the three employs them, is not describing a real IRS contract.
Accounts land with one of these firms for a narrow set of reasons, not at random: the IRS lacked the staff or the ability to locate the taxpayer, a year passed with no contact from the taxpayer or a representative, or more than two years passed since the tax was assessed without the account ever being assigned for collection. None of those triggers hands the private firm any new legal power over the debt, only a different company doing the calling.
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What the Law Reserves for the IRS Alone
Congress requires the IRS to place certain unpaid accounts with outside contractors, but the same framework draws a hard boundary around what those contractors can do once they have the file. A private collection agency cannot take any type of enforcement action, cannot request a payment made directly to the company or loaded onto a prepaid debit, gift or iTunes card, cannot collect a household’s financial account information, and cannot charge a fee for setting up a payment plan, according to the IRS’s page on accounts assigned to private collection agencies. Filing a Notice of Federal Tax Lien against a house or issuing a levy against a bank account are legal powers that stay with the IRS itself; a private collector cannot take either action to collect a debt, even when a taxpayer refuses to pay.
Payments follow the same rule. Every dollar still has to go to the United States Treasury, whether by mailed check, IRS Direct Pay, the Electronic Federal Tax Payment System, or a pre-authorized direct debit that a taxpayer signs in writing, one that names the Treasury as payee and that a taxpayer can cancel up to a business day before it runs. A private collector never gains standing access to a bank account under any of those payment methods.
The Two Letters That Arrive Before Any Phone Call
Genuine contact from a private collector follows a fixed sequence that a scam call skips. The IRS mails a Notice CP40 first, naming the specific agency assigned to the account and including a Taxpayer Authentication Number the household can use to confirm who is calling later, according to the IRS’s own explanation of the CP40 notice. The assigned agency performs a two-party verification with that same number before it will discuss any account details, and it sends its own confirmation letter, repeating the assignment, before making a single call.
Only after both letters have arrived does the phone ring. A call that comes first, or a caller who asks a household to read out its authentication number rather than confirming a number the household already holds, is not following the process the IRS itself describes, and that mismatch is the clearest single tell of an impersonator.
Accounts the IRS Will Never Hand to a Private Collector
The program also excludes whole categories of taxpayers from being assigned to a private collector in the first place. Recipients of Supplemental Security Income or Social Security Disability Insurance are automatically excluded, along with anyone whose adjusted gross income does not exceed 200% of the applicable poverty level, a threshold that covers a meaningful share of older, fixed-income households a caller might target. Taxpayers who are deceased, under 18, in a designated combat zone, victims of tax-related identity theft, currently under examination or criminal investigation, subject to an active offer in compromise or installment agreement, or living in a presidentially declared disaster area are excluded from the program on the same list the IRS maintains.
That list matters because a caller claiming to represent a private collection agency on an account that fits one of those categories is describing an account the IRS says would never have been assigned in the first place, a detail the agency’s own program page makes a matter of public record, not a judgment call left to the household on the phone.
The Letter a Homeowner Still Has to Write
Knowing what a private collector cannot do still leaves a household holding the phone, unsure what to send back or what actually stops repeated calls. A written response carries more weight than a verbal promise, and a frozen account calls for a different move entirely than a letter that never should have mentioned a bank levy. Neither situation resolves itself just because the caller’s authority turned out to be limited.
The Bank Account & Debt Protection Kit walks through the debt-validation steps a household can send in writing and lays out the frozen-account response for when funds are held up by an unrelated creditor.
Read the debt-validation steps in The Bank Account & Debt Protection Kit.
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