Does the ATO use debt collectors?

Who gets referred to a collector

Referral is not the first step. Before an account goes to an agency the ATO will normally have tried to reach you by phone, SMS or letter, then sent a pre-referral warning letter. If you do not respond, or you have no payment plan in place, the account can be handed to recoveriescorp, which has actioned ATO referrals since January 2024.

Debts that get referred tend to be the ones the ATO has not been able to get a response on, rather than the largest or oldest debts. When the ATO restarted external collection it said it expected to refer somewhere between 100,000 and 150,000 taxpayers in the first stretch, so a referral is common and is not a sign that you are being singled out.

If you have unlodged returns or BAS, sort those first. A collector can only chase an amount the ATO has raised, and a default assessment made in your absence is usually higher than the real figure.

What the collector can and cannot do

Recoveriescorp acts as a contact and negotiation channel for the ATO. It is not a creditor in its own right and it does not have the ATO's enforcement powers.

• It can: phone, text, email and write to you, discuss your situation, help set up a payment plan, and report back to the ATO on whether you have engaged.
• It cannot: issue a garnishee notice, issue a director penalty notice, take you to court, come to your home, seize property, remit interest or settle the debt for less.

Those firmer steps stay with the ATO. If the referral ends without a resolution the file goes back to the ATO, and that is when garnishees, statutory demands and other firmer action become more likely.

How to check the contact is genuine

Scammers copy real agency names, so do not reply to a message you are unsure about. Hang up or ignore the text, then call back on a number you have found yourself.

• Recoveriescorp on 1300 323 495 (the number the ATO publishes for taxpayers).
• The ATO general debt line on 13 11 42, and ask whether your account has been referred.
• Report anything suspicious to the ATO scam line on 1800 008 540.

A genuine collector will never ask for gift cards, crypto, or a transfer to a personal account, and will never threaten arrest. More on this in is this recoveriescorp text legit.

What to do now

A referral is a good moment to engage, because the ATO is still in the phase where a payment arrangement is straightforward. You do not have to deal with the collector if you would rather not: you can set up an ATO payment plan yourself through ATO online services (for debts up to $200,000) or by calling the ATO. Once a plan is in place, the collector's involvement usually stops.

If the debt is too large to manage, or interest and penalties are a big part of it, it is worth getting matched with a specialist before you agree to anything you cannot keep.

What to do next

1. Verify the contact by calling recoveriescorp on 1300 323 495 or the ATO on 13 11 42 using numbers you looked up yourself.
2. Log in to ATO online services and check your actual balance and any unlodged returns.
3. Decide whether you can pay in full or need a payment plan, and set it up with the ATO directly or through the collector.

More questions: 12 Debt collectors and credit reporting questions answered · Full guide: ATO debt collectors