Tuesday, April 25, 2017

The IRS Hires Private Debt Collectors - Get IRS Protection - IRS Tax Attorney

In 2009, the Internal Revenue Service (IRS) decided to end a three-year program that used private debt collectors to chase down delinquent taxpayers after an internal report found that it was actually losing the government money and that government employees were much more efficient at collecting debt than their private sector counterparts. This was the agency’s second attempt at using such a program.

Despite both failures, Congress passed the “Fixing America’s Surface Transportation Act” (FAST) in 2015, which requires the IRS to employ private debt collection agencies as a means of helping fund road improvement projects.



DON'T GET ABUSED BY 

IRS COLLECTION AGENCIES

In apparent reluctance, the IRS waited until earlier this month to make it official, announcing on April 4 that it “will begin sending letters to a relatively small group of taxpayers whose overdue federal tax accounts are being assigned to one of four private-sector collection agencies.” According to NBC News, the IRS has hired four collection agencies – CBE, ConServe, Performant and Pioneer Credit – to collect outstanding tax debts from taxpayers who have been contacted several times by the IRS but still have not paid.

The U.S. Treasury plans to assign up to 1,000 delinquent accounts to each of the four companies on a monthly basis, who have been offered the incentive of retaining 25 percent of the tax bills they collect.

One of the agencies hired by the IRS – Pioneer Credit – had its contract with the Department of Education terminated in 2015 after it was found to have made “materially inaccurate representations” to struggling borrowers “at unacceptably high rates” in its attempts to collect on defaulted federal student loans. Pioneer Credit’s parent company, Navient, was also fined $97 million by the federal government in 2014 for overcharging military service members and misrepresenting late fees on student loans.

In addition to the troubling history of some of the collection agencies that have been hired, consumer advocates have expressed concern over the IRS’ third attempt to use private debt collection to claim unpaid taxes, arguing that the move is likely to cause a host of problems, such as the mistreatment of borrowers and an increase in tax fraud.

Chi Chi Wu, a staff attorney with the National Consumer Law Center, told NBC News:

“There are so many reasons why it’s a bad idea that the IRS has been forced to use private debt collectors. They’re the most complained-about industry to the Federal Trade Commission [FTC] and the Consumer Financial Protection Bureau. All too often, consumers are being mistreated by debt collectors and now taxpayers are at risk of that in the collection of tax debt.”

Wu added that most of the people who will be targeted are likely to be struggling financially, making them eligible for certain compromise programs or non-collectible status – information that private debt collectors are likely to withhold from borrowers, as it benefits those companies financially. “The collectors don’t have any incentive to do that because they get paid a commission for every dollar they bring in. Their main incentive is to collect money, come hell or high water,” Wu said.

CALL FLAT FEE TAX SERVICE, INC.

IRS TAX ATTORNEY

Furthermore, as tax professor Adam Chodorow noted in an article for Slate, the use of private collection agencies to obtain unpaid taxes increases the likelihood of tax fraud, as private entities impersonating the IRS may harass innocent taxpayers and pressure them into paying debts that don’t actually exist.

Susan Grant, director of consumer protection at the Consumer Federation of America, echoed Chodorow’s concerns, telling NBC News: “We’ve always warned not to believe anybody who calls you claiming to be from the IRS because the IRS doesn’t call trying to collect delinquent taxes. And now, people will be calling.”

While the Federal Trade Commission and the IRS both plan to issue updated warnings about imposter scams, the potential for abuse from both scammers and the officially-hired private collection agencies remains high.

FLAT FEE TAX SERVICE, INC.

1  - 8 0 0 - 5 8 9 - 3  0 7 8








No comments:

Post a Comment