In addition to funding transportation projects, the Fixing America’s Surface Transportation Act, signed into law by President Obama on December 4, 2015, also will directly impact IRS tax collection methods. While the IRS has had discretion in using private debt collectors to recover owed tax debts, the new law will require the agency to utilize private parties to recover overdue taxes in certain situations. Specifically, accounts that are nearing the statute of limitations for collection or that have posed difficulty in collecting must be handed over to a private agency. This means more private debt collectors will be going after citizens who owe taxes.
While interacting with the IRS is not a highly anticipated occasion for most people, the agency’s behavior toward taxpayers is generally considered to be civil as it must follow rules and procedures when interacting with taxpayers. The debt collection industry is a sharp contrast as numerous consumers have filed formal complaints against agencies alleging overly aggressive behavior. Requiring the IRS to utilize third party debt collectors increases the likelihood of taxpayers who encounter these agencies filing complaints and mistakenly attributing the inappropriate behavior to the IRS.
In addition to degrading the IRS’s overall image, using third party debt collectors has proven to be an expensive, inefficient process in other instances. Not only would the IRS be required to invest time and money in administering the third party debt collector agencies, but the government would also be required to pay the debt collectors for their services. Utilizing a third party agent would also likely increase the frequency of debt collection scams. The IRS does not typically contact taxpayers over the phone. Therefore, people have been able to determine that if someone attempts to collect money or personal information over the phone on behalf of the IRS, the phone call is likely part of a scam. However, third party collectors often attempt to contact account owners by phone. Therefore, taxpayers may have more difficulty in determining whether individuals and organizations who contact them over the phone are indeed authorized by the IRS.
Taxpayers who owe the IRS may avoid interaction with private debt collectors by settling their debts directly with the IRS. Gary Kaplan is available to advise individuals and businesses on tax planning, communicating with the IRS, and paying tax debt. His services are available to taxpayers in Florida, Maryland, Washington, D.C., Utah, and New York.
