Private Agencies To Begin Collecting Taxes
As of late, the Internal Revenue Service or IRS has been growing a backlog of debt. To deal with the growing problem, the IRS has recently hired private companies to aid them in the task of retrieving owed money. The IRS announced that it has hired four agencies do retrieve long-standing debts from people who have been contacted numerous times about their debt and have yet to pay. The process is taking a slow start. Initially, the agencies will only mail and call a few hundred taxpayers. The number is expected to grow to a few thousand later in spring and into summer.
Private Tax Collectors
Taxpayers will not be surprised by the appearance of these agencies at their doorstep. The IRS will give taxpayers with overdue tax bills several warnings before handing over their accounts to the agencies. The agencies must then send their letter to the taxpayer stating that the account is now in the agency’s jurisdiction. The private collectors must say that they are working for the IRS in the message.
The IRS is responsible for ensuring that the private collectors do their job responsibly and give due respect to taxpayer rights. The IRS has also stated that there are some accounts that they will not give to the private collectors. Those accounts are:
- Men and women in combat zones
- Victims of identity theft relating to taxes
- Accounts that may be subject to installment agreements
- Accounts that are classified as an innocent spouse case.
Fair Debt And Collection Practices Act
The Fair Debt And Collection Practices Act sets the rules for all debt collectors, even collectors hired by the IRS. The law states when a collector can call someone, whom they are allowed to call, and what they can say during the phone call. The IRS has also indicated that the agencies they have hired will not be permitted to use robocalls to contact the taxpayers.
Congress Allows Private Tax Collectors
The hiring of the private collection agencies was not the IRS’ individual decision. Congress untimely made the decision. Congress requires the IRS to hire the agencies to aid in the funding of the Fixing America’s Surface Transportation Act
Many people, IRS employees as well as ordinary citizens, are worried. They fear that the collection agencies may harass taxpayers. Many tax collectors do not pay their debts because they are just unable, and they need assistance more than they need threats. Debt collectors are one of the most disdained industries because they often mistreat the people they are attempting to collect. Hiring the agencies may be putting people at risk of harassment.
The debt collection companies are known to be cruel when it comes to taking money from people. They are often paid commission for the money they bring in, so the larger the sum they can retrieve from debtors the better their payout. Unfortunately, many of the accounts they get from the IRS may be of people well below the poverty line.
The people under the poverty line likely qualify for programs that can aid them in paying off their debt, such as receiving a “not collectible status.” The debt collectors are unlikely to inform them of that because it is counter-intuitive for their business. One of the hired agencies, Pioneer, already has a lawsuit pending against them for lying in a manner that caused some debtors to pay more than they should. Pioneer claims the allegations are false and vows to defend itself.
Be Cautious With New Tax Collectors
The IRS advises taxpayers to be cautious. The incorporation of new collection agencies will likely cause confusion for a time. It is possible that fraudulent “agencies” may attempt to use the hiring of the companies to scam taxpayers. Scammers have already lied and stated they were IRS workers before, and they will likely double their efforts while the situation is unclear. The IRS is aware of the chances of fraud and plans to do everything it can to help taxpayers avoid confusion and ensure taxpayers understand their rights. There are several ways to know if who you are in contact with is not with the IRS. A few examples are:
- They are very aggressive or threaten you with arrest or coming to your residence.
- They pressure you to pay them immediately.
- They inquire about your credit or debit card information.
- They request you pay them in gift cards, prepaid debit cards, or a wire transfer.
A legitimate debt collector will instruct you to send your check directly to the IRS. Do not send federal tax money to anyone other than the IRS.
If you are unsure of any correspondence you have received from the IRS, contact an experienced tax attorney in Atlanta.