Is the IRS Resorting to Private Debt Collection?

Monday, November 30, 2015
We are the Strategic Tax Lawyers, a firm of California tax lawyers. We want to inform you about the Internal Revenue Service possibly using private debt collectors to collect long standing debts from taxpayers.  Congress is proposing to use these debt collectors from collection agencies who will be contracted by the IRS to recover back taxes. Politicians believe this is a surefire way to raise money to pay for projects such as costly highway construction.  However, the opponents of this believe debt collection would lead to abusing the system which, when tried in the past, did not work and was a headache and expensive.

Highway and road building projects are often funded by certain taxes, but due to inflation and other circumstances, there has been a loss in revenue.  To remedy the situation, Congress is stepping in to collect on unpaid income taxes which they estimate is approximately $5 billion in unpaid taxes.  Their solution is to hire private debt collectors to go after taxpayers.  Critics believe that the estimates are exaggerated and the amount that would actually be collected is nearly half, $2.5 billion. That is still an overstated estimate because a lot of debt is owed by low-income taxpayers who cannot pay off their debt in the first place. Add to that the high fees that the collection agencies would which would eat into the tax profit. When the IRS tried to recover tax debts a decade ago using private debt collectors led to the agency losing money on the effort. Taxpayers also complained about getting harassing calls from the debt collectors. In general tax collectors have a bad reputation when dealing with taxpayers. For instance, they do not have the proper tools to negotiate payment schedules or to waive any late payment penalties.
If the IRS will choose to use collection agencies, they will thoroughly investigate them to make sure they are using professional, legitimate debt collectors.  There are many opponents who will fight Congress from bringing debt collection agencies out of the House and Senate bills and out of the taxpayer’s hair.

The Strategic Tax Lawyers, LLP are a firm of California Tax Attorneys, IRS lawyers, and IRS Fresh Start lawyers.  We, at the Strategic Tax Lawyers Firm, are experts in tax code with years of experience dealing with the IRS.  Call the Strategic Tax Lawyers at (800) 669-4775 for a free consultation to assist you with your tax-related matters.