AUGUSTA — The Internal Revenue Service recently began outsourcing collection of long-overdue tax obligations to four separate, private debt collection agencies.

This decision has created some confusion and concern, not because of the activity of the companies – each of which is licensed as a collection agency in Maine – but rather because some scammers are taking advantage of the new practice by calling Maine residents and pretending to be legitimate collectors seeking tax debts.

The Maine Bureau of Consumer Credit Protection enforces the federal and state Fair Debt Collection Practices Act in Maine, so members of our staff have received many calls and written complaints from residents who have received these abusive calls. By providing some background behind the IRS’ move, and by reporting on how the system is designed to operate, we hope to alleviate consumer confusion and allow Maine residents to differentiate actual tax collector calls from scam calls.

Earlier this year, the IRS hired four private debt collectors to act as agents of the IRS to collect long-overdue tax bills. This new collection program was authorized when Congress passed a bill in 2015 that was signed into law by then-President Barack Obama the same year.

The only consumers who will be referred to the program are those with whom the IRS has had repeated contact, but the taxes remain unpaid.

Those debtors will receive a “Goodbye Letter” from the IRS (with a case file number) notifying them that their file is being transferred to one of four debt collection companies. All four companies hold collection agency licenses issued by the Maine Bureau of Consumer Credit Protection.

The companies are:

CBE Group, of Cedar Falls, Iowa.

Conserve, of Fairpoint, New York.

Performant, of Livermore, California.

Pioneer, of Horseheads, New York.

Once the private collection agency receives the file, it will mail a “Hello Letter,” with the same case file number, announcing it is acting as an agent-contractor of the IRS, and that it will be attempting to collect the federal tax monies owed.

The letter will make clear that any checks from consumers should be made payable to “United States Treasury.”

But as is the case in so many legitimate enterprises, scammers have entered the scene, using illegal collection tactics and intimidating Maine consumers.

Both the Maine Bureau of Consumer Credit Protection and the Maine Attorney General’s Office have received numerous calls from Mainers who have been contacted by scammers claiming to represent the IRS and trying to collect alleged overdue taxes.

How can you tell an authorized collector from a scammer?

First of all, scammers will call out of the blue, whereas you will have been previously notified in writing both by the IRS and by the authorized collector regarding an actual tax debt. Second, the callers will make threats, often involving criminal prosecution.

Consumers report that they’ve been told they will be arrested, or thrown in prison, or immediately taken to court if they don’t send funds to the callers that same day.

Finally, scammers will demand money through an instant-payment process, such as a wire transfer or money order, or through the consumer’s purchase of a prepaid debit card, including iTunes cards.

Once the consumer purchases the prepaid card, they will be asked to read the numbers off the card over the phone, which will allow the scammers to collect the funds from virtually any place in the world

So, Mainers, don’t fall for this scam. The IRS will never demand that you immediately transfer funds.

Rather, legitimate collections will not come as a surprise, but instead will be the culmination of a long series of written communications notifying you that you owe federal taxes.

The IRS’ Treasury Inspector General for Tax Administration has set up a hotline (1-800-366-4484) for consumers to place complaints regarding the collection practices of these private companies.

Formal letters of complaint can be mailed to: Treasury Inspector General for Tax Administration, P.O. Box 589, Ben Franklin Station, Washington, D.C. 20044-0589.

Consumers with questions can also contact our office here in Maine, toll free 1-800-332-8529.

So heed the indications of the “IRS Scam”: a call without prior notice, in which the caller demands immediate payment. Be smart with your money – don’t fall for a high-pressure “telephone line.”

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