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IRS CP40 LETTER? WHAT DOES IT MEAN?

Posted by Michael S. Anderson | May 27, 2021 | 0 Comments

When the IRS issues a CP40 letter, it means three things:

1.  The IRS has assigned collection of your IRS debt to a private debt collector

The IRS is understaffed, and as a result has moved some collection files to private collection agencies.  It's chosen your file because it may have found it difficult to locate you or your assets.  

There are four private collectors who are licensed to collect IRS debt.  CBE Group, Conserve, Pioneer and Performant.

Your CP40 letter should contain the contact information of one of those four companies.

The IRS has a page dedicated to the private collection program and you can learn more about these companies and how the private collection operates.

2.   You aren't facing levy or garnishment...at least for now

Private debt collectors who work on IRS collection matters don't have the ability to garnish wages or levy accounts and assets.  They also can't issue lien notices.   They aren't required to share your financial info with the IRS.  My guess is that they do.

Their abilities are limited to requesting payment and proposing payment plans.

If you respond and an arrangement can't be worked out, it's probable the collection file will go back to the IRS collection unit where more serious consequences await.

3.   It may make sense to leave your IRS debt matter with the private collector and use the CSED to your advantage

The IRS has 10 years to collect a tax debt.  This time-frame and exceptions to it are governed by the CSED Section of the Internal Revenue Manual.

If your debt is "close" to running it's CSED course, the IRS' ability to collect the debt is close to running it's course as well. 

If this is the case, it may make sense to try and keep the file with the private collector for as long as possible.  Talking to the private collector and being unable to reach an agreement may cause as mentioned... the case to move back to IRS collections.

 

About the Author

Michael S. Anderson

Michael Anderson has been representing Arizona clients with tax debt problems for almost two decades and has helped his clients eliminate millions of dollars in tax debt. His tax debt practice is limited to helping individuals and the self-employed who have serious IRS problems.

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