The Internal Revenue Service does not send every overdue account to one of its own revenue officers or in-house call centers. Since 2015, a slice of the agency’s oldest unpaid tax debts has gone instead to independent collection firms working under federal contract, a program now large enough that the agency’s own watchdog tracks how much money it pulls in every year. A federal review released in late August lays out exactly how much these outside collectors, and the small IRS unit that manages them, brought in over the past three fiscal years, and the pace of growth stands out against a shrinking IRS workforce.
How the FAST Act Put Private Collectors on IRS Accounts
The program traces back to the Fixing America’s Surface Transportation Act, signed into law in December 2015, which added Section 6306 to the tax code and required the IRS to hand certain old, unworked tax debts — what the agency calls “inactive tax receivables” — to outside contractors rather than leaving them indefinitely with its own collection staff. Fees retained from the program also fund a small in-house unit, Special Compliance Personnel, that works parallel cases using the same authority.
Three firms currently hold those contracts: CBE Group, Coast Professional, and ConServe, each assigned a share of the accounts the IRS’s private debt collection program refers out. Accounts destined for the program typically pass first through the IRS’s automated notice stream and, if still unresolved, an electronic holding file the agency calls the Queue, before being routed to a private agency instead of a revenue officer. Before any of the three firms places a call, the IRS mails a Notice CP40 naming the specific agency assigned to the account, so a household sees a government letter first rather than hearing from a private collector with no warning.
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Three Fiscal Years, $6.1 Billion, and a 119 Percent Jump
According to the Treasury Inspector General for Tax Administration’s August 2026 review of IRS compliance trends, the Private Debt Collection program brought in $6.1 billion in revenue across fiscal years 2023 through 2025, with collections climbing 119 percent from the first year of that window to the last. Of the $6.1 billion, the review found that almost $2 billion was collected directly by the three private agencies, with the remainder credited to the IRS’s own Special Compliance Personnel working cases under the same program.
That growth outpaced the IRS’s broader Collection function, which grew 17 percent over the same three years, and it came almost entirely from balances already flagged as inactive — accounts the agency’s own notice stream and telephone-based Automated Collection System had not resolved on their own. Even so, the private program remains a small share of the government’s overall haul: the IRS’s four enforcement functions combined collected roughly $278.6 billion in enforcement revenue over the same three fiscal years, meaning Private Debt Collection accounted for a little over 2 percent of that total even as it grew far faster than any other collection channel.
Which Accounts Are Off-Limits to Private Collectors
Not every delinquent account qualifies for the program. The IRS keeps a standing list of accounts it will never assign to a private collection agency, including taxpayers who are deceased, under 18, in a designated combat zone, or a confirmed victim of tax-related identity theft, along with anyone already in an active installment agreement, offer in compromise, examination, appeal, or litigation over the debt, anyone classified as an innocent-spouse case, and anyone in a presidentially declared disaster area who has requested collection relief.
The exclusion list also protects households already living on a fixed income: anyone receiving Supplemental Security Income or Social Security Disability Insurance is off-limits, as is anyone whose adjusted gross income falls at or below 200 percent of the applicable federal poverty level. Those carve-outs matter because the program’s actual targets, by design, are accounts that have already gone unanswered through years of ordinary IRS notices — a profile scammers frequently try to imitate over the phone.
Why the IRS Is Leaning Harder on Outside Collectors
The increase is unfolding as the IRS’s own enforcement staff shrinks. The same TIGTA review found that Examination and Collection staffing fell 27 percent from fiscal 2024 to fiscal 2025 amid governmentwide workforce reduction efforts that began in early 2025, with the number of revenue officers in Field Collection dropping from 3,418 to 2,544 over that span. Total Collection staffing — revenue officers and campus collection employees combined — fell from 11,869 in fiscal 2024 to 7,843 in fiscal 2025, a drop that came almost entirely after workforce reduction efforts began that February.
At the same time, automated collection notices that had been paused intermittently since the pandemic resumed in February 2024, feeding more delinquent accounts into every part of the system — the notice stream, the Automated Collection System’s phone units, and eventually the private debt collection program — just as the IRS has fewer of its own staff available to work them directly.
Telling a Real Collector From a Scam
Because a call about back taxes is one of the oldest scam scripts around, the identity checks built into the program matter as much as the revenue figures. Every CP40 notice and every private agency’s follow-up letter carries a taxpayer authentication number, and the two-party verification process described in IRS Publication 4518 requires both sides to exchange pieces of that number before any account details are discussed. The same guidance is explicit that a legitimate contractor will never demand payment by prepaid debit card, gift card, or wire transfer, and that any check owed on the debt should be made out to the U.S. Treasury and sent to the IRS directly, never to the collection agency itself.
TIGTA, which compiles the enforcement data behind these figures, also runs the hotline the IRS points taxpayers to when a caller claiming to represent one of the three contracted agencies skips the CP40 letter, pressures for immediate payment, or asks that money be sent anywhere other than the Treasury — the same warning signs the program’s own materials use to separate its contractors from anyone impersonating them.
From an IRS Letter to a Frozen Bank Account
Nothing in the private collection process explains what happens if a household falls further behind and a bank account ends up frozen or a debt gets passed along to a separate collector entirely. The rules that protect certain funds once they hit a bank account, and the steps for challenging a debt that may not even be verified correctly, sit in a different part of federal law than the private collection program itself, and few households have those steps written down before they need them.
The Bank Account & Debt Protection Kit prints the 2-month bank protection rule and the debt-validation steps for anyone contacted about an overdue account.
See the 2-month bank protection rule in The Bank Account & Debt Protection Kit.
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