By Gerard H. Schreiber Jr., CPA; Kristine R. Wolbach, CPA; and Marilyn Young, CPA, Ph.D.
Sec. 6306 requires the Treasury secretary to enter into qualified tax collection contracts with private collection agencies (PCAs) to collect "outstanding inactive tax receivables," and during 2017 the IRS selected four PCAs to participate in the program. Under the statute, a tax receivable means any outstanding assessment included in the "potentially collectible inventory." Eligible receivables for the program meet one of the following criteria:
- The IRS has removed the receivable from the list of collectible inventory at any time after assessment due to either a lack of resources or the inability to locate the taxpayer;
- The tax receivable has not been assigned for collection to any IRS employee, and more than one-third of the applicable statute-of-limitation period has passed; or
- There has been no contact between the IRS and the taxpayer or a representative for more than 365 days with respect to collecting the tax receivable (Sec. 6306(c)(2)(A)).
Thus, the IRS must make an assessment pursuant to its assessment authority under Sec. 6201 or be seeking payment from the taxpayer for an amount due on a previously filed tax return before the account is assigned to a PCA. However, the IRS cannot assign certain accounts, including those of taxpayers who are victims of identity theft, currently under examination, or subject to a pending or active offer in compromise or an installment agreement.