The Internal Revenue Service is preparing to use private debt collectors to go after people who have not paid their taxes. Congress added a tax collection provision in the new 2015 highway funding bill.
“These are taxes that are owed and not in dispute,” said Sen. Chuck Grassley, R-Iowa.
The IRS has tried to outsource tax collection twice before, in 1996-1997 and 2006-2009. Others believe the change could make it easier for scammers – posing as IRS collectors – to steal more money from more victims. The new law allows authorized debt collection companies to make “robocalls” or “robotexts” without obtaining prior consent. The Help Americans Never Get Unwanted Phone calls Act (HANGUP), is a newly introduced bill, attempting to repeal the robocall and robotexts provisions.
In the last two years, the Tax Administration received more than 730,000 complaints about imposters claiming to be with the IRS, with 4,550 victims paying more than $23 million to criminals.
Until now, consumer advocates said The IRS does not initiate contact with taxpayers by phone, also stating the same on The IRS web site. The IRS still says it will “never call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill. According to the General Accountability Office, before anyone would receive a call from a private debt collector, the person will have received a letter notifying them of the outstanding debt, and that it has been turned over to a debt collection company. Second, legitimate private debt collectors will not be allowed to accept payment directly over the phone. All payments are required to be processed by the IRS.”
The new law requires the IRS to enter into contracts with qualified tax collectors by early March.
The IRS is reviewing the legislation and taking steps to soon implement the program.
The IRS already had the option to use third party private firms for debt collection. The new law makes it mandatory in cases where the statute of limitations is running out, or the IRS is unable to collect.
Third party debt collectors can be aggressive because they are paid by what they can recoup, and on average, trigger more consumer complaints than other industries.
A report from the nonpartisan congressional Joint Committee on Taxation estimates the use of private collectors would bring in $2.4 billion by 2025. This is far less than just one percent of the total $380 billion owed as of July 2015.
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