What is the CP40 IRS Notice? | IRS Notice CP40 | The IRS Assigned Your Overdue Account to a Private Collection Agency

What is the CP40 IRS Notice? | IRS Notice CP40 | The IRS Assigned Your Overdue Account to a Private Collection Agency

While IRS Notice CP 40 is not good news, it is not necessarily bad either. If you receive CP40 IRS Notice, it should not be taken lightly.

CP40 IRS Notice is an informal notice sent by the Internal Revenue Service to inform you that your tax account has been assigned to a private collection agency.

If you receive a CP40 IRS Notice, it is essential to take action! Below is an article to discuss what you need to know.

What is the CP40 IRS Notice?

Congress in 2015, passed a law that allows the Internal Revenue Service (IRS) to assign certain unpaid tax accounts to a private collection agency.

The law has specific restrictions, the IRS is only allowed to work with the following private collection agencies:

Effective September 23, 2021, taxpayers may be contacted by the following private collection agencies (PCAs):

CBE
P.O. Box 2217
Waterloo, IA 50704
800-910-5837

Coast Professional, Inc.
P.O. Box 526
Albion, NY 14411
888-928-0510

ConServe
P.O. Box 307
Fairport, NY 14450
844-853-4875

Before September 23, 2021, the IRS contracted with the following private collection agencies:

CBE (Waterloo, IA)

ConServe (Fairport, NY)

Performant (Pleasanton, CA)

Pioneer (Horseheads, NY)

Any other private collection agencies claiming to be resolving tax debts on behalf of the IRS are fraudulent.

Why Would the IRS Send Your Account to a Private Collection Agency (PCA)?

IRS will place your account with a PCA for collection of your unpaid tax liability because you met one of the following criteria:

IRS lacks the resources
The IRS could not locate you
A year has passed, and you or your representative haven’t contacted the IRS regarding your account
More than two years have passed since the assessment, and the account was not previously assigned for collection

How Can You Verify That Your Account Has Been Transferred to a Private Collection Agency (PCA)?

The IRS will always send you a letter before you are contacted by a Private Collection Agency (PCA). IRS will send Notice CP40. It verifies that your case was transferred to a PCA and will provide a Taxpayer Identification Number for verification.

Since there are so many fake official-looking Form CP 40s being sent by scammers, it is best to verify that your account has been transferred independently. To do this, you would request an account transcript through our Get Transcript tool to verify that your account was assigned to a PCA. The transcript will list the following:

CODE	EXPLANATION OF TRANSACTION	DATE	AMOUNT
971	Collection referred to a private debt collection agency	Listed Date	$0.00
971	Notice issued CP 0040	Listed Date	$0.00

How Can You Verify the Contact is Coming From a Legitimate PCA?

Before you receive a phone call, the IRS and the private collection agency (PCA) will send you a letter. The IRS will send you Notice CP40, and the PCAs will send you an initial letter. Both will contain the same Taxpayer Authentication Number. The PCA uses this number to verify your identity, and you can use the number to confirm the PCA’s identity. It would be best if you kept both letters in a safe place for future reference.

For additional information, you can also view the IRS video Private Collection of Overdue Taxes.

When Do You Receive a CP40 IRS Notice?

The IRS will always send a Notice CP 40 indicating a private collection agency has been assigned to your account to resolve tax debt. It would be best to be careful verify a IRS CP40 Notices because plenty of scammers submit fake notices and attempt to pose as the IRS.

The process should be as follows:

The IRS will send you Notice CP40 and Publication 4518. This notice reminds you have overdue taxes and that the account has been assigned to a private collection agency.
Next, you will receive an initial contact letter from the private collection agency. The letter will list information about how to resolve your overdue taxes.

It is essential to check each letter for a Taxpayer Authentication Number. The number is designed to confirm your identity and indicate the letter is legitimate.

What Should You Do After Receiving a Notice CP40?

You can never be too safe when it comes to avoiding scams in the 21st century. Therefore, never just assume a CP40 IRS Notice is legitimate, no matter how legitimate the letter looks.

Taxpayers should always validate that a caller is from one of the legitimate private collection agencies allowed to do business on behalf of the IRS. The agency should always ask a series of questions to verify your identity. As part of their questions, they should ask you to verify a portion of the Taxpayer Authentication Number listed on the CP 40 Notice you received. You should, in turn, ask them to verify another portion of the Taxpayer Identification Number.

Private collection agencies are required by law to treat you with professionalism, courtesy, and respect. The agency is not allowed to threaten you for unpaid tax debt. If that is the case, you must report their violations immediately.

How can You Avoid IRS Scams like Fake CP40 Notices?

Use caution if you are contacted by phone or email by a person who claims they represent a private collection agency authorized to resolve your tax debt. Never provide any personal information before double-checking using the Taxpayer Identification Number:

● Verify the collection agency is one of the authorized Private Collection Agencies working on behalf of the IRS.

● You should have received an official CP40 Notice indicating the agency assigned. You will also receive an initial orientation letter from that agency. Verify that the agency names match. The agency must send you that correspondence before contacting you over the phone.

● Both the CP40 Notice and collection agency letter will contain the same Taxpayer Authentication Number. Verify they are the same!

If you are still skeptical, consider contacting a Certified Tax Resolution Specialist. Reputable firms are familiar with CP40 Notices and dealing with private collection agencies.

The PCA Should NEVER Ask You For a Direct Payment.

Make all payments to the IRS. The PCA will never ask you to pay them directly or through prepaid debit, iTunes, or gift cards. The private collection agency can provide information on ways to pay, or you can visit Payments for electronic payment options. You can also see Publication 594, The IRS Collection Process, for ways to pay your taxes.

Payment options include:

IRS Direct Pay to pay an individual tax bill directly from a checking or savings account at no cost
Electronic Federal Tax Payment System to pay federal taxes online or by phone for free
Debit or credit card using an electronic payment service provider for a fee
Check or money order, made payable to the United States Treasury. Write your name, Social Security number, and tax year on your payment
Preauthorized Direct Debit is a convenient and secure option that requires your written permission to authorize the PCA to draft a check, or a series of checks, on your behalf. The checks are always made payable to the United States Treasury and can be changed or canceled up to one business day before the scheduled payment. Ask your PCA how to authorize the direct debit option to conveniently and securely schedule one or multiple payments.

Can the PCA Take Enforced Collection Actions?

Private Collection Agencies have limited collection capabilities: PCAs have the legal authority to take the following collection actions;

File a Notice of Federal Tax Lien
Issue a levy to collect an overdue account.

Do I have to Work with the PCA?

You do not have to work with the PCA; you can request to be transferred back to the IRS in writing.

Getting Help with Your CP40 Notice and Tax Debt

There are ways to resolve tax debt that won’t put you into financial hardship. Legacy Tax & Resolution Services would be happy to help solve your tax problems. Use the link below to set up a free initial consultation today! Call us at 800-TAX-SITE 800-829-7483 or visit Initial Free Consultation to schedule a free initial consultation.

Contact Legacy Tax & Resolution Services for Tax Audit or Review Response Services

Legacy Tax & Resolution Services is available for free initial consultations. We’re happy to answer any questions about the audit or review response process. We will get to know your specific situation and address any of your concerns

There’s never a good time to be audited! It is a time-consuming process that can have devastate results if not handled properly. It can take away previous time from your business and family if you attempt to handle it on your own. Let us handle and coordinate communication the IRS, so you can live your life.

What do you need to do?

Read the notice carefully. It contains important information about what happens next.
File any unfiled tax returns that you are required to file.
Keep the CP40 notice for your records. You will need information from it to complete the two-party verification with the collection agency, explained below.

You may want to

Read Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency (PDF) and Publication 1, Your Rights as a Taxpayer.
Access the IRS Private Debt Collection (PDC) webpage.
Contact the private collection agency at the phone number on the notice.
Wait until the private collection agency contacts you.
Visit www.irs.gov/payments for more information about ways to pay.

The private collection agency will verify your personal information to protect the security and privacy of your tax information. They will also perform two-party verification by asking you for the first five numbers of your taxpayer authentication number shown at the top of your notice. The private collection agency will then supply the next five numbers.

What are your options?

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What is my first step?

If you received a letter or notice, a decision has to be made. Do you feel confident to handle this situation on your own? If it is a simple issue and you already know the answer, call or write them. If the issue is more complicated, you need to hire a Certified Tax Resolution Specialist. The IRS or State will take full advantage of your lack of knowledge and experience.

What is Your Next Step?

The next step is to determine if the notice was sent in error. Do you have an outstanding tax liability? Do you have unfiled or incomplete returns?

Is There a Time Limit?

Yes, each letter or notice from the IRS or State will indicate a date that you MUST to contact them by. If you need more time, call the number on the notice or letter and request an extension. DO NOT ALLOW the time to expire without contacting them or hiring a representative to contact them for you.

What You Don’t Want to Do!

What you don’t want to do is nothing. Your tax problems will only get worse if you ignore them. If you cannot pay, there are a number of potential solutions available to those who are otherwise in compliance. In compliance means having all tax returns filed and any balances paid or on a payment plan. If you have outstanding debts or unfiled returns, you need to get hire a Certified Tax Resolution Specialist.

Get Some Help

If you don’t know how to address the issue(s), have unfiled return/unpaid balances or just done feel confident, let the experts at Legacy Tax & Resolution Services represent you. Work with our team of Certified Tax Resolution Specialists to resolve your issue(s) quickly. Best of all, you don’t have to talk to the IRS or State; we can speak on your behalf.