Can the IRS send debts to private collection agencies? Got a notice from Conserve about tax owed

Yes, the IRS does use private collection agencies (PCAs) for certain tax debts. This program was authorized by Congress in 2015 and has been ongoing since then. There are currently four approved agencies that the IRS uses: CBE Group, Conserve, Performant, and Pioneer. So receiving a notice from Conserve about IRS debt can be legitimate. Before taking any action though, you should verify this is legitimate. The IRS always sends a letter (CP40) notifying taxpayers that their account is being transferred to a private collection agency before the agency contacts you. If you didn't receive this letter first, be cautious. For your penalty abatement request, you can still apply for first-time penalty abatement directly with the IRS rather than through the collection agency. Call the IRS directly using the number on your original tax notice (not the collection agency letter) and explain your situation. For 1120-S late filing penalties, the first-time abatement can be very effective if you have a clean compliance history.

After dealing with my own tax mess last year, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out if I qualified for penalty abatement. You upload your IRS notices and it analyzes them to tell you what options you have. I was in a similar situation with a late filing penalty and wasn't sure if I could get it removed. The tool showed me that I qualified for first-time abatement and even gave me the exact language to use when calling the IRS. It also explained how the private collection agencies work with the IRS and what their limitations are. Saved me a ton of research time.

I was skeptical about taxr.ai at first but decided to try it for my S-corp's late filing penalty situation. I had a $2,800 penalty for filing our 2022 return four months late. The tool analyzed my notice and confirmed I was likely eligible for first-time penalty abatement based on my answers about previous compliance. It gave me a script to use when calling the IRS that highlighted our perfect payment history and explained our reasonable cause (our accountant had a family emergency). I called using their suggested approach and got the entire penalty removed in one call. Saved me from having to pay that collection agency that had been hounding me. The most helpful part was explaining exactly what to say and what not to say. I would have probably said things that hurt my case without realizing it.

If you're struggling to get through to the IRS directly (which is likely), check out Claimyr (https://claimyr.com). I used their service when I was dealing with a similar situation with a private collection agency. They got me connected to an actual IRS agent in about 15 minutes when I had been trying for days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Basically they use technology to hold your place in the IRS phone queue and call you when an agent is about to answer. I needed to confirm whether my account had actually been assigned to a collection agency and discuss penalty abatement options. Getting through to a live person at the IRS made all the difference.

I hate admitting when I'm wrong but I have to eat my words about Claimyr. After posting that skeptical comment, I decided to try it anyway out of desperation. I had been trying to reach the IRS for THREE WEEKS about a collection notice. Used the service yesterday and got connected to an IRS agent in 17 minutes without having to stay on hold. The agent confirmed my account had been assigned to Conserve legitimately but also processed my penalty abatement request right there on the phone. $2,100 penalty GONE. For anyone dealing with these private collection agencies - definitely call the IRS directly and ask about first-time abatement if you qualify. The collection agencies don't tell you about these options because they're just trying to collect.

Just adding to the conversation - I've worked in tax resolution for years, and these private collection agencies are legit but VERY limited in what they can do. They basiclly can only: 1) Take payments 2) Set up installment agreements up to 7 years 3) Forward requests for other relief options to the IRS They CANNOT: - Issue liens or levies - Garnish wages - Approve penalty abatement - Accept offers in compromise - Make any final decisions on your case So if you're seeking penalty abatement, you NEED to talk to the IRS directly. The collection agencies are just middlemen for certain types of cases the IRS doesn't want to handle in-house.

Idk if this helps but I got a letter from Pioneer (another IRS collection agency) last year. Called the IRS directly and found out I qualified for Currently Not Collectible status because of financial hardship. The collection agency never mentioned this was an option even though I told them I couldn't pay. So definitely talk to the IRS directly about ALL your options, not just the ones the collection agency tells you about.

This is really helpful information everyone is sharing! I'm in a similar situation with a late filing penalty for my LLC. One thing I wanted to add - when you call the IRS directly about penalty abatement, make sure you have all your documentation ready. They'll want to know the specific reason for the late filing and any supporting evidence. For health-related issues with your accountant, if you have any documentation of that (like medical records or communication showing the accountant was unavailable), it could strengthen your reasonable cause argument. The IRS is generally pretty understanding about situations beyond your control, especially if you have a good compliance history. Also, when you do call, be prepared to explain why this was a one-time occurrence and what steps you've taken to prevent it from happening again. They like to see that you're being proactive about future compliance.