IRS To Use Private Debt Collection Agencies

It did not work the first time in 1996. It did not work the second time in 2006. Both times the IRS lost money. Three times a charm?

Congress has ordered the IRS to hire private debt collection companies to go after delinquent taxpayers. Problem number one is obvious. The IRS has spent much time and money educating citizens not to believe telephone callers claiming to be from the IRS. Now, taxpayers are going to be exposed to legitimate telephone calls. How are they going to be able to tell the difference?

The plan is that the IRS will send a letter to the individual advising that their case has been assigned to one of four contractors. Then the private agency will send a letter before there are any telephone calls. Only time will tell how this will work, but no doubt many people will hang up when they receive the calls.

The program will start with only about 400 taxpayers receiving mailings and will increase to thousands a week as the year goes on, assuming there are no problems.

If you have a new tax debt, are currently working with the IRS, or owe more than $50,000, you will not be part of the program. However, if you have an old debt and have not been heard from the IRS recently, this is their way of taking another shot at you.

These firms will not be able to file liens or issue levies. All they can do is to try to work out payments. They must follow the Fair Debt Collection Practices Act, but no matter how respectful or courteous they may try to be, taxpayers will feel intimidated and harassed. The good news is, as with any IRS situation, hiring a tax professional will protect you from the calls and allow you to work out a deal that you can afford.