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The IRS has transferred your debt to a private collection agency. Here's what's real, what's a scam, and what your rights are. Call Tax Titans: (888) 684-4992.
The CP40 notice tells you something unusual: the IRS has transferred your account to a private debt collection agency.
This surprises many taxpayers. The IRS contracting with private collectors is legitimate — it's authorized by Congress and has been in place since 2017. But the program also creates significant confusion because IRS impersonator scams are common, and many taxpayers can't tell the difference between a real IRS-authorized private collector and a fraudster.
Here's what's real, what your rights are, and what you should do next.
Congress authorized the IRS to use private debt collection agencies for certain inactive or older accounts — cases where the IRS's own collections capacity is limited and the accounts have been sitting without active collection efforts. The IRS currently contracts with three private agencies: CBE Group, Coast Professional, and ConServe.
Your account may have been assigned to a private collector if:
Not all accounts are eligible. Accounts involving taxpayers who are deceased, under 18, in active bankruptcy, in active combat zones, or who are victims of identity theft cannot be assigned to private collectors. Under the Taxpayer First Act, the IRS also excludes people who receive SSI or SSDI benefits and people whose adjusted gross income is at or below 200% of the federal poverty level.
Before you communicate with anyone claiming to be collecting on behalf of the IRS, verify this:
You should have received TWO letters: First, the IRS sends a letter (CP40) notifying you of the assignment. Then, the private collection agency sends their own introductory letter. Both letters carry the same taxpayer authentication number, which the agency uses on the phone to verify your identity and which you can use to confirm the caller is legitimate. If you received a phone call before either letter, that is a red flag — potentially a scam.
Legitimate private collectors will never:
Legitimate private collectors will:
If anything about the contact feels wrong, hang up and call the IRS directly at 1-800-829-1040 to verify whether your account has actually been assigned.
Having your account assigned to a private collector does not eliminate your resolution options. All IRS programs remain available to you:
Installment Agreement: Private collectors can set up payment plans on behalf of the IRS. However, the terms they offer may not be the most favorable available. A tax professional can negotiate directly with the IRS — not the private agency — for better terms.
Offer in Compromise: You can still apply for an OIC even while your account is with a private collector. The OIC application goes to the IRS, not the collection agency. Once an OIC is submitted and acknowledged, the account typically returns to IRS control.
Currently Not Collectible: If you qualify for hardship status, this can be applied regardless of which entity is managing your account.
Private collection agencies work on commission — they are incentivized to collect as much as possible, as quickly as possible. Their goal is not to find the resolution that is most favorable to you. It is to get you to pay.
Before you agree to any payment arrangement with a private collector, have a tax professional review your options. You may qualify for:
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Is the CP40 notice real or a scam?
The CP40 is a real IRS notice sent via U.S. mail. If you received it by mail with a return address from the Department of Treasury or the IRS, it is real. Phone calls about private collection — especially before any letter arrives — should be treated with suspicion.
Can I request to have my account returned to the IRS?
If you don't want to work with the assigned agency, the IRS says to send that request in writing to the agency. Separately, some situations, such as a pending Offer in Compromise or installment agreement, take an account out of private collection. A tax professional can evaluate whether this applies to your situation.
Do I have to deal with the private collector, or can I work directly with the IRS?
You can work directly with the IRS on resolution options (OIC, installment agreement, CNC) regardless of whether a private collector is involved. The private collector manages the account collection, but the IRS controls the resolution programs.
What if I can't pay anything the private collector proposes?
Do not agree to payments you can't sustain. Tell the collector you need to consult with a tax professional, then call us. A payment plan that defaults is worse than one that was never established — it triggers enforcement faster the second time around.
Tax Titans | (888) 684-4992 | info@taxtitansusa.com
This article is for informational purposes only and does not constitute legal or tax advice.
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