Private Tax Collectors Not a Good Strategy for the IRS

Friday, September 11, 2015
Back in 1996, the IRS launched a program to utilize private debt collectors to assist the tax agency with collecting on the millions of dollars of unpaid taxes that taxpayers owe.  One year later, the program was cancelled when an investigation found that those debt collection firms were violating the Fair Debt Collection Practices.  This caused the Internal Revenue Service to lose almost $17 million.  
In 2004, a similar attempt was made to hire private debt collectors in order to create more jobs for the industry. This, however, also failed miserably during the Bush administration. There were major violations of the same Fair Debt Collection Practices with debt collectors calling and harassing the elderly over 150 times.

Currently, Senate just approved a new bill that requires the IRS to use private debt collectors. Third time a charm, maybe?  
The Senate approved the legislation which will cost the nation $275 billion over the six year program term.  Democratic Senator Schumer from New York believes this bill will help secure at least $2.4 billion over the next decade from debt collection by the private debt collectors.  Schumer believes that jobs will be generated in New York and tax revenue will be boosted. 

Republicans, on the other hand, are infuriated by this decision as well as by IRS practices.  They have continually reduced the IRS’ budget by 20% over the last five years.  Congressional cuts already have caused the IRS major damage due to reduced staff and decreased audit rates.
A tax attorney has commented that that this plan will create more problems.  Where are the lessons learned in all this? The tax attorney compared the IRS having discretion to pronounce some tax debt as merely uncollectible, due to financial or health issues, while private debt collectors will stop at nothing to get the debt returned. This is how problems are created.

Will this crate more budget cuts for the IRS? Less IRS audits?
Stay tuned for more news about this.
The Strategic Tax Lawyers are experienced IRS tax lawyers, IRS CP504 Attorneys and Audit Tax Attorneys who have counseled clients about the protection of their assets from creditors.  These IRS tax lawyers can help you plan how to remove guesswork to prevent any issues.  The Strategic Tax Lawyers offer free and confidential consultations about estate planning, estate tax exemption, will & trusts and tax-related issues. Call today at (800) 669-4775 if you need assistance.