CP40 Notice
The CP40 is an IRS notice informing you that your overdue tax account has been assigned to a private collection agency. The IRS works with authorized private collectors to recover certain unpaid taxes. You still have the same rights and options as if the IRS were collecting directly.
Why Did You Receive This Notice?
You received a CP40 because you have an outstanding federal tax balance that the IRS has referred to one of its authorized private collection agencies. The IRS began using private collection agencies in 2017 for certain inactive tax debts — accounts that are too old for active IRS collection, accounts the IRS lacks resources to pursue, or accounts assigned to the IRS's queue for private sector assistance.
What Does this Mean for You?
The CP40 means a private collection agency — one of the IRS-authorized firms — will be contacting you soon by mail and possibly phone to arrange payment of your tax balance. The notice will identify which agency has been assigned to your account. Importantly, you retain all the same taxpayer rights and payment options you would have if the IRS were collecting directly.
What Happens If You Ignore It?
Your Options
- Respond to the private collection agency: The agency assigned to your account will send you a letter. You can contact them to set up a payment plan, discuss your options, or verify the debt.
- Pay the IRS directly: Even with a private agency assigned, you can still pay your balance directly to the IRS at irs.gov or by check made payable to the United States Treasury. Never send payment directly to the private collection agency.
- Request IRS intervention: If you prefer to work directly with the IRS rather than the private agency, contact the IRS to discuss returning your account to IRS management.
Step-By-Step: What To Do Next
Step 1: Read the CP40 carefully and note which private collection agency has been assigned to your account.
Step 2: Watch for a separate letter from that agency — it will include contact information and payment options.
Step 3: Verify the agency is one of the IRS-authorized firms listed on irs.gov to confirm the contact is legitimate.
Step 4: Contact the agency or the IRS to discuss your payment options — installment agreements, lump-sum payment, or hardship status.
Step 5: Only make payments directly to the IRS (irs.gov or check to U.S. Treasury) — never wire money or pay by gift card to any collection agency.
Step 6: Document all communications with the agency.
Can You Handle this Yourself?
You can handle a CP40 on your own by contacting the assigned private collection agency and arranging a payment plan. Before engaging, verify the agency's legitimacy at irs.gov — the IRS only works with a small number of authorized firms. The key rule is to always pay the IRS directly, never the collection agency itself, to ensure your payment is properly applied to your account.
Expert Insight From Rockwater Tax
At Rockwater Tax, we caution clients about scam collection calls that impersonate IRS-authorized collectors. The CP40 notice will identify the specific agency assigned to your account — if someone calls claiming to represent the IRS or a collector but you haven't received a CP40, treat it as a potential scam. Legitimate collectors will always send you a letter first and will never demand immediate payment by gift card or wire transfer.
Need a hand?
FAQ
Q: Is the private collection agency trying to scam me?
A: The IRS does use authorized private collection agencies, but scammers also impersonate them. Verify the agency is one of the IRS's authorized firms listed at irs.gov before engaging. Never pay by gift card or wire transfer.
Q: Can I still set up a payment plan after getting a CP40?
A: Yes. You can set up an installment agreement with the private agency or directly with the IRS at irs.gov.
Q: Will the private agency report the debt to credit bureaus?
A: The IRS-authorized private collection agencies are not permitted to report debts to consumer credit bureaus.
