Have you received a call from a private debt collection company that is claiming to be collecting tax debt on behalf of the IRS? Well, before you conclude that it is a scam and slam the phone down (perhaps not before saying a few choice words to the person on the other end of the line), hold on: it might be legitimate.
Yes, as strange as it sounds given that the U.S. government is spending a lot of taxpayer money trying to warn folks about various “you owe the government money” phone scams, the IRS has indeed tapped private debt collectors to try and reclaim certain overdue Federal tax debts. The program was announced in September 2016, and the calls started in spring 2017.
This is not the first time (and alas, will not be the last) that Congress has given the IRS the green light to outsource collections. In the past, this move has failed miserably and triggered a massive amount of taxpayer confusion and frustration. It’s also somewhat of a mystery as to why the IRS would even head down this path, since they are without question the country’s most powerful debt collector. What other organization can — without any formal court action — move to file tax liens and levies, garnish wages and other sources of income, or have Agents contact employers, accountants and even family members?
With this being said, there is some hope (albeit faint) that this time things will work, since it’s also in the interest of honest taxpayers to ensure that their fellow citizens are paying their share. To that end, the private debt collection agencies included in the program are obliged to adhere to the Fair Debt Collections Practices Act. They must also:
- Be courteous and respect taxpayer rights.
- Identify themselves as contractors to the IRS, and not as employees or representatives of the IRS.
- Not ask for payments on a prepaid debit card.
- Inform taxpayers about electronic payment options.
- Direct all checks to be sent directly to the U.S. Treasury (not to the private collection agency).
What’s more, to try and avoid confusion or illicit impersonations, the IRS has said it will give each taxpayer and their representative written notification that their account has been transferred to a private debt collection company. If and when a payment is made, the IRS will also send a written notification confirming that the funds were received.
If you have tax problems, owe money or have been contacted by either the IRS or an authorized debt collection agency, then don’t panic: there is light at the end of the tunnel. Seek advice from a professional immediately (like today would be a good idea), and take whatever steps are necessary to resolve your tax situation in an organized, structured and sustainable way. You’ll sleep better at night, and you won’t be afraid of hearing the phone ring during the day.