U.S. expatriates living in foreign nations generally understand that their lack of physical presence does not excuse them from U.S. tax filing and payment obligations. In fact, absent certain provisions found in tax treaties, expats would face a more significant tax burden as they would face both local and U.S.-based taxation. For some taxpayers living abroad who may not be aware of methods to reduce or eliminate double-taxation, this can mean that large tax bills build up over time. These tax bills may be old and the IRS may have even given up on collecting them.
However, these tax debts, which are due and owing, may spring back to the minds of U.S. taxpayers throughout the world as private debt collectors begin to make their collection attempts. U.S. taxpayers living abroad may be surprised to receive calls from debt collectors. CPA Ted Kleinman and U.S. Tax Help can provide the guidance expats need to avoid potential tax scams while navigating the new tax challenges presented by private IRS debt collectors. To schedule a no-cost consultation, call Ted at U.S. Tax Help at (541) 923-0903.
What Should I Do if I am Called by a Private Debt Collector Over Tax Debts?
Until recently, tax practitioners could safely advise clients and potential clients that the IRS would never call them or seek payment of outstanding debts over a phone call. Despite this clear-cut advice, fraudsters tricked American taxpayers out of hundreds of millions of dollars. The use of private debt collectors who can and will call taxpayers will only serve to introduce additional confusion and uncertainty while increasing the likelihood that taxpayers will be taken in by a scam.
This risk is supposed to be balanced by the IRS and private debt collection company issuing initial communications regarding their intent to use a private debt collector. These notifications must be in writing and a notice must come from both the IRS and a private collector. However, individuals living outside of the United States are far less likely to receive mailings and written notifications. Expats may only check their U.S. mailbox periodically or other issues may prevent the reliable delivery of mail. Thus, a taxpayer may be called upon to judge the veracity of an alleged private tax collector’s claims without the benefit of notice.
However, at a minimum, expat U.S. taxpayers should recognize that only four companies have contracted with the IRS to provide these services. Thus, if the agent that calls does not identify him or herself as being from one of the following companies, it is highly likely that the call is a scam. Companies that are authorized to provide tax debt collection services are:
P.O. Box 2217
Waterloo, IA 50704
P.O. Box 307
Fairport, NY 14450-0307
P.O. Box 9045
Pleasanton, CA 94566-9045
PO Box 500
Horseheads, NY 14845
If you are contacted by an individual who claims to represent one the above companies and want a second opinion regarding whether the debt is legitimate, we can help.
Work with a Tax Professional When Seeking Tax Relief
If you have been surprised with a call from a private debt collector regarding a large tax debt, you are probably seeking ways to reduce or eliminate the obligation. You are also likely seeking ways to resolve your tax debt even when you had a suspicion or knew about a tax debt.
Some taxpayers may be well served by filing a request for an offer-in-compromise. While offers-in-compromise can be difficult to obtain, they will allow a taxpayer to settle a tax debt for less than the face value of the debt. However, requests for offers-in-compromised that are based on an individual taxpayer’s reasonable collection are more likely to be granted.
In the case of a divorce, innocent spouse relief may present a viable means to reduce or eliminate one’s tax liability. Innocent spouse relief can release an uninvolved or minimally involved spouse from the wrongdoing or mistakes other the other spouse. In certain scenarios, innocent spouse relief can provide significant tax relief.
If you are an expat living abroad and looking to get a handle on old tax debts before a private tax debt collector calls, CPA Ted Kleinman and U.S. Tax Help can assist. Schedule a free initial consultation by calling (541) 923-0903 today.