- Older tax debts on which more than one-third of the statute of limitations has lapsed
- Tax debts to which no IRS agent is assigned
- Accounts in which the IRS has not made contact in more than a year
This program will roll out in spring. The IRS will notify taxpayers whose accounts are assigned to a private debt collector by mail (the IRS does not contact taxpayers by phone). These agencies will have limited powers. While the IRS can file liens or issue levies, these agencies will have no such ability. Further, these collectors will not have the authority to accept offers in compromise or installment agreements.
Concerns with private collectors
While enlisting private debt collectors may help the IRS recover money it otherwise would not get, there are serious concerns about using these agencies. One concern is that using private agencies could confuse taxpayers, making them more vulnerable to scams in which individuals impersonate IRS agents. To minimize confusion, these collectors would not have the ability to take payments over the phone. Rather, taxpayers would make payments directly to the Treasury Department.
Another concern is that using private collection agencies would violate the taxpayers’ rights. In its press release, the IRS stated that debt collectors wil l be required to follow the Fair Debt Collection Practices Act (FDCPA), and that collectors would be “courteous and respect taxpayer rights.”
This is not the first time the IRS has used private tax collectors
This is the third attempt to use private debt collectors to collect unpaid taxes. The IRS used private agencies in 1996 and from 2006 to 2009. In each instance, the costs associated with collecting debts outweighed the benefits of collecting. It remains to be seen whether the third time will be the charm for the IRS, or whether this attempt, like others, will prove ineffective, so stay tuned.
Taxpayers facing liens, levies or other serious tax issues must retain the services of knowledgeable legal counsel. Based in Manhattan, the attorneys of Goldburd McCone LLP work with taxpayers across New York, the United States and internationally.
Sources: New Private Debt Collection Program to Begin Next Spring, IRS.gov, Here Come the Private Tax Debt Collectors … Again, Accounting Today, by Jim Buttonow, September 20, 2016