IRS Outsourcing Its Collection Function – New Private Debt Collection Program to Begin Next Spring
You would think that with all the fraudulent calls being made by parties presented themselves as working for the IRS to scam taxpayers out of money, the IRS would crackdown on this problem and tighten its reins. But instead the IRS does the opposite and announced on September 26, 2016 that it plans to begin private collection of certain overdue federal tax debts next spring and has selected four contractors to implement the new program.
The new program, authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. As a condition of receiving a contract, these agencies must respect taxpayer rights including, among other things, abiding by the consumer protection provisions of the Fair Debt Collection Practices Act.
This is not the first time that Congress has authorized the IRS to out-source its collection functions and each time the IRS has tried to out-source collections they have failed miserably. After all the IRS is the most powerful debt collector in that without formal court action can quickly file tax liens and levy your accounts and garnish your sources of income without any consideration of how much you need to pay bills or obligations.
So this time the IRS says that the type of taxpayer accounts that will be turned over to private collection are those where taxpayers owe money but the IRS is no longer actively working their accounts. Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases. So if the really difficult accounts are being turned over for private collection, what tactics do you think that private collectors may take to secure payment from taxpayers and how are taxpayers supposed to know they are dealing with an authorized contacted agent versus a scam artist?
The IRS says it will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment. So the IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The IRS will then send a second, separate letter to the taxpayer and their representative confirming this transfer.Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes.
Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act and must be courteous and respect taxpayer rights. Furthermore, private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will also be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.
The IRS has selected the following contractors to carry out this program:
CBE Group, 1309 Technology Parkway, Cedar Falls, IA 50613
Conserve, 200 Cross Keys Office Park, Fairport, NY 14450
Performant, 333 N, Canyons Parkway, Livermore, CA 94551
Pioneer, 325 Daniel Zenker Drive, Horseheads, NY 14845
While I am skeptical that the outcome of this program will be any different than previous collection out-sourcing programs, we see it as an opportunity to provide taxpayers with a chance for a better resolution than what the IRS could offer.