The Internal Revenue Service (IRS) recently announced a new payment option for taxpayers who are behind on their tax bill or who otherwise find themselves facing a large, unmanageable tax debt. According to the agency, taxpayers can now elect to have debit cards pre-authorized to allow regular payments.
How does the new program work?
The option is a part of the private debt collection program, run by third parties. With this program the taxpayer provides authority to collect from a pre-authorized card. However, it is important to note the taxpayers is not giving this authority to the IRS, but to a private collection agency (PCA).
Once the taxpayer provides authorization, the PCA will collect the payment on behalf of the Department of Treasury.
The IRS’ use of PCAs to collect taxes was the result of a law passed in 2017. This law, pushed through by Congress, led to the IRS handing over certain tax collection efforts to PCAs.
What could go wrong?
This is not the first time the agency has used PCAs. Privatization of collection efforts was tried in the past and failed. Skeptics are concerned this effort will also fail. One specific concern includes the potential for abuse. At least one PCA is connected to a company that was accused of abuse when it attempted to collect payments on student loans for the Education department. This included use of a script with an implied threat that the PCA would involuntarily seize payment from the individual. Critics point out this type of language is likely a violation of the Fair Debt Collection Practices Act (FDCPA).
Those against the use of PCAs have also stated there is potential for taxpayers to agree to payments they cannot afford when a PCA requests a preauthorized credit card.
A third concern involves the possibility that the new program will result in identity thieves attempting to use this new tactic to their advantage.
What options are available for taxpayers to protect their interests?
Those that find themselves facing questions from the IRS are wise to act to protect their interests. The attorneys at Goldburd McCone are familiar with the tactics used by the IRS and can review your situation and discuss the best options available to protect your interests.