The Internal Revenue Service (IRS) recently reported that its use of third-party debt collection companies has thus far proven successful. These companies have reportedly collected millions from taxpayers.

Is this a new way to collect taxes?

It is and it is not. The IRS has attempted similar collection efforts in the past. The government shut down two previous attempts because they cost too much to operate. As a result, the government has not attempted such efforts for decades.

The government passed the use of this most recent attempt at outsourcing collection efforts with a highway spending measure in 2015.

Is it working?

Yes. According to the agency’s recently released numbers, the IRS has collected $213 million during 2019.

Does the IRS get all of the collected funds?

No. The debt collection companies take a cut. However, even after this cuts and other fees were subtracted from the total collective nouns, the agency still received $170 million.

Are there restrictions on who the debt collection companies can contact?

Yes. These companies are not allowed to contact taxpayers that are under the age of 18, or in an active combat zone. Additional restrictions include those who are the subject of identity theft as well as taxpayers who are currently working out a payment system with the IRS. Examples of these plans could include an installment agreement for an offer in compromise.

Will this program continue?

Based on its current success, it appears likely that the use of third-party debt collectors by the IRS will continue. As a result, taxpayers that are struggling to manage their debt or who are concerned that they are not meeting their tax obligations are wise to protect their interests. The attorneys at Goldburd McCone are familiar with tax collection matters and can provide guidance to help you find a more manageable resolution.