IRS Private Debt Collection


The Internal Revenue Service (IRS) is relaunching the much criticized private debt collection program this month after Congress required it to do so as part of legislation passed at the end of 2015.

The IRS said Tuesday the program will be getting underway this month, starting with a few hundred taxpayers who have owed debts for years and received repeated notices from the agency. Four private debt collection companies have been contracted to help collect debts on behalf of taxpayers, but the IRS said it has put in place protections to safeguard taxpayers from harassment and to avoid confusion with scammers pretending to call from the IRS.

The IRS is taking steps throughout this effort to ensure that the private collection firms work responsibly and respect taxpayer rights,” said IRS Commissioner John Koskinen in a statement. “The IRS also urges taxpayers to be on the lookout for scammers who might use this program as a cover to trick people. In reality, those taxpayers whose accounts are assigned as part of the private collection effort know they have a tax debt.

Taxpayers assigned to a private debt collection agency will have had multiple contacts from the IRS in previous years and still owe unpaid taxes.

Murphy noted the IRS remains extremely concerned about the many con artists who masquerade as IRS employees or contractors. “They want to trick people into giving them money for sensitive financial information, so we urge everyone to be on the lookout for any scammers who might use this program as a cover to swindle taxpayers,” she said. “We will be watching closely for any such schemes as the private collection program gets underway. This effort will include working with our partners in the tax preparer community and law enforcement agencies to stop emerging scams.”

Past Failures

The National Treasury Employees Union (NTEU) and the National Taxpayer Advocate (NTA) have long criticized the private debt collection program when it has been tried in the past.

Every time this has been tried before, it has failed,” said NTEU national president Tony Reardon in a statement Tuesday. “But once again Congress has forced this policy on the IRS, and we expect the results to be the same: collection agents getting paid to harass taxpayers, many of whom need assistance, not threats.

NTA Nina Olson has said the program places “a bulls-eye on the back of low income taxpayers.”

The NTEU pointed out that a 1996 pilot program for IRS private debt collection was so unsuccessful it was canceled after 12 months. The contractors participating in the pilot programs were found to have regularly violated the Fair Debt Collection Practices Act, and the program resulted in a $17 million net loss. The IRS again attempted to use private collection agencies in 2006. The program was projected to bring in $2.2 billion in new revenue, but data from the IRS indicated the program resulted in a net loss of almost $4.5 million to the federal government, after subtracting $86.2 million in program administration costs and more than $16 million in commissions to the PCAs. The Treasury Department and the IRS again decided to cancel the program.

Sandy’s note: Here is a program that has failed every prior time it was instituted. However, this time it isn’t the fault of IRS. The idiots in Congress have forced IRS to start implementing this program due to budget cuts also caused by Congress. Even worse, despite the promises made by IRS, I don’t see how taxpayers can distinguish between valid private debt collectors and that of scammers.


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