Not every notice sent to you from the IRS is intended to bring sadness to you. However, if you receive a CP40 Notice from the IRS, then you need to pay attention as it shouldn’t be taken frivolously.

A CP40 IRS Notice is an informal document from the Internal Revenue Service that brings to your notice that your tax account has been sent to a private collection agency. The notice is comparatively new sequel to a law that was passed in the year 2015.

If you receive a CP40 IRS Notice, you need to take action. Here is everything you need to know about the CP40 IRS Notice.

What is the CP40 IRS Notice?

In the year 2015, a law was passed that permitted the Internal Revenue Service (IRS) to send unpaid tax debt to a private collection agency. The motive for the legislation was to ease some of the work the IRS receives, yet has certain limitations.

For instance, under the 2015 law, the IRS is only permitted to work with four private collection agencies:

  • CBE (800-910-5837)
  • Conserve (844-853-4875)
  • Performant (844-807-9367)
  • Pioneer (800-448-3531)

The IRS is mandated under the 2015 law to make use of one of the four above private firms for tax collection. Any other private collection agency that poses as though it is resolving tax debt on behalf of the IRS is fraudulent.

When Do You Receive a CP40 IRS Notice?

The IRS will always get in touch with you before a private collection agency if you need to resolve tax debt. There are plenty of scammers that attempt to pose as the IRS and submit fake notices so you need to be careful with CP40 IRS Notices. Therefore, the process works as follows:

  • You will receive a Notice CP40 from the IRS and Publication 4518. The first round of notice is used to let you know that you have overdue taxes and that the debt has been assigned to a private collection agency.
  • The second round of notice involves the private collection agency which has been assigned your tax debt reaching out to with an initial contact letter. The letter will include information about how to settle overdue taxes.

It is essential to check each letter for a Taxpayer Authentication Number. The number is designed to confirm your identity as well as show the letter is legitimate. Keep in mind, there are a lot of IRS scams out there waiting for the opportunity to steal your money.

What Should You Do After Receiving a Notice CP40?

  • You can read Publication 4518 ‘’What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency” for more information.
  • Access the IRS Private Debt Collection (PDC) webpage. This is a useful tool to make sure you aren’t falling victim to a scam
  • Contact the private collection agency at the phone number on the notice
  • Wait until the private collection agency contacts you

You can never be too secure when it comes to preventing scams in the 21st century. Therefore, never just suppose a CP40 IRS Notice is legitimate no matter how legitimate the letter reads.

Taxpayers should always confirm that a caller is from one of the four private collection agencies allowed to do business with the IRS. The agency should always ask a series of questions to confirm your identity. On the other hand, you should get asked to exchange portions of the Taxpayer Authentication Number with the agency to verify each other’s identity.

Private collection agencies are required by law to treat you with professionalism, courtesy, and respect. The agency is not allowed to intimidate you for unpaid tax debt. If that is the case, you must report their violations without delay.

How can you Avoid IRS Scams like Fake CP40 Notices?

If you are contacted by phone or email from a person who claims they stand for a private collection agency authorized to settle your tax debt, use caution. Never give any personal information before double-checking that:

  •     The collection agency is one of the four authorized to work with the IRS.
  •     You have received an official CP40 Notice and an initial orientation letter from the agency. The agency must send you that correspondence first, before contacting you over the phone.
  •     The CP40 Notice and collection agency letter contain a Taxpayer Authentication Number.

If you are still doubtful, consider reaching out to a tax professional. Highly regarded firms are familiar with CP40 Notices and dealing with private collection agencies.

How can you be sure the private collection agency contacting you is under contract with the IRS?
There are numerous scammers out there that pretend to be the IRS. They call people; they send phony mails and emails. So how do you know you’re not working with a scammer?

The IRS says:

“Your CP 40 notice contains the name and contact information of the private collection agency assigned your account. The names of all the private collection agencies under contract with the IRS can be seen on the IRS website. The private collection agency will also send you a letter verifying assignment of your tax account.”

I don’t think this is total evidence as scammers could easily send a fake letter impersonating to be coming from one of these agencies and list a fraudulent call back number.  When in doubt, be wary. Never give any of your personal information, such as your social security number to someone that calls you.

Can the collection agencies work with me on payments?

The short answer is yes. They can counsel you on how to pay in full, or work with you to set up a payment arrangement if you can’t pay in full when contacted. I’d be wary about this. You will be dealing with someone in a call center who has gone through basic IRS training.

They will not have your best interest at heart and may not be well versed in the payment option that is most excellent for you. At most they could work with you to set up an Installment Agreement, but they cannot assist you with things like an Offer in Compromise, Currently non-collectible status, or Innocent Spouse issues.

If you do not desire to work with your assigned private collection agency to resolve your overdue tax account, you must tender this request in writing to the private collection agency.