Published On: April 22, 2017

Congress instructed the IRS to use private debt-collectors to collect overdue payments from taxpayers, despite this idea being a complete failure in 1996 and 2006

tax debt collection

Debt Collectors abusive shakedown

April, 2017 – according an article in the New York Times, Congress instructed the Internal Revenue Service is going to use private debt-collection companies to collect overdue payments from taxpayers, despite this idea being a complete failure in 1996 and again in 2006.  This new provision was buried in a $305 billion highway funding bill – a great place to hide a significant change in the IRS tax debt collection policy.

Who will be harmed?

Nina E. Olson, whose job at the Internal Revenue Service is to be an advocate on behalf of taxpayers, believes that assigning collection to debt collectors is “a bad idea,” she wrote in a letter to Congress. “It disproportionately impacts low-income and other vulnerable taxpayers, and despite two attempts at making it work, the program has lost money both times, undermining the sole rationale for its existence.”

Ms. Olson refers to psychological tricks that may have coerced some debtors into payments they could not afford forcing them to chose between housing or paying tax obligations.  Tactics that are not used by IRS collection agents.

Why is this a problem with this type of tax debt collection?

For many years criminals have preyed on taxpayers, most who are elderly and other vulnerable groups, lying that they represent the IRS.  For years consumer protection groups have been educating the public that IRS agents do not call or email a delinquent taxpayer, instead those contacts are made by letter. For more on that subject read: impersonating I.R.S. collectors.

What companies were hired?

tax debt collection

Congress wants taxes paid before food or housing.

Four – Pioneer Credit Recovery, a subsidiary of Navient, who has a tortured history of poor debt collection practices (fired by Education Department for misleading borrowers) so of course another government agency should offer them the same opportunity to abuse the vulnerable.  CBE Group, ConServe and Performant.  Could there be a problem in giving an organization with a proven history of abuse authority to collect from a vulnerable community?  Now what could possibly happen?

What is the benefit to the collection companies?

They will work on commission, earning up to 25 percent of debts collected.  This will definitely encourage abusive behavior!

If history bears out this program will be another complete failure and result again in abuse of the vulnerable.

Proponents of the tax debt collection plan say the potential gain will net $2.4 billion over the next 10 years, yet the two past failed attempts show it cost the tax payer more than was collected.tax debt collection


According to Morgan King:

Key provisions governing private collection of IRS taxes:

  • Taxpayers will be protected by rights provided under the Fair Debt Collection Practices Act (FDCPA).
  • Both private collector and IRS will send letters to the taxpayer informing them about assignment to private collector.
  • Payments are to be made directly to the IRS.tax debt collection

 

By |Published On: April 22nd, 2017|Last Updated: May 29th, 2022|

Share this article

About the Author: Diane Drain

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*

Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Google Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Yelp Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Avvo Reviews
Avvo - Rate your Lawyer. Get Free Legal Advice.
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Alignable Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Better Business Bureau
5 / 5

“You folks are the BEST OF THE BEST in Arizona.” M.H.

You and Jay are the best attorneys I have ever had or needed and thank God for the Honorable Robert Gottsfield in recommending you folks – I would have never made it through the entire process without you and Jay and God Bless you both always and stay in touch as well. You folks are the BEST OF THE BEST in Arizona.

5 / 5

“My only regret is that I didn’t find Diane sooner.” K.H.

I can’t say enough good things about Diane. The way she handled my not typical circumstances was amazing. I was very nervous to start the bankruptcy process but Diane just has a very comforting way of explaining the whole process. My only regret is that I didn’t find Diane sooner. If you find yourself in a financial situation that you can’t correct on your own, please Call Diane Drain as soon as possible.

5 / 5

“Filing for bankruptcy can be a stressful life event” R.A.

Filing for bankruptcy can be a stressful life event, and selecting the right attorney can add to this stress. Diane and Jay were a pleasure to work with, and it is obvious that they are passionate about helping people get their life back on track. I would highly recommend them if you need a bankruptcy attorney.

Related Posts

  • Published On: July 24, 2022

    Want to avoid dishonest debt collectors?  Watch this video from FTC’s Consumer Advice By Joseph Ferrari,July 22, 2022 (reprint from FTC, Consumer Alerts) During Military Consumer Month 2022, the FTC [...]

  • Published On: October 25, 2021

    CFPB Confirms Effective Date for Debt Collection Final Rules (Reprint from CFPB, July 30, 2021) The Consumer Financial Protection Bureau (CFPB) today announced two final rules under the FDCPA will [...]

  • Published On: August 29, 2021

    Dirty Little Secret – medical bills are the highest they have ever been and debtor buyers are paying pennies on the dollar to purchase the debts, but then sue the [...]

  • Published On: May 4, 2021

    CFPB Rule Clarifies Tenants Can Hold Debt Collectors Accountable for Illegal Evictions Bureau Issues Interim Final Rule on Fair Debt Collection Practices Act (reprint April 19, 2021) The Consumer Financial [...]

My intention is to put you back in control of your life
Start with $0 down*. We provide affordable payment plans.

FREE CONSULTATION