There are times when an individual isn't able to pay his or her taxes or disputes the amount owed. Whatever the case, many hard-working and honest Americans struggle with tax debt problems. Previously, the IRS took action to handle these cases by sending notices to delinquent taxpayers and requesting payment. A taxpayer then had the options to work with the agency to sort out a repayment plan, have a portion of his or her tax debt forgiven or dispute the matter.
Recently, with the passage of the Fixing America's Surface Transportation Act or FAST Act, a provision was signed into law that allows, and in some cases mandates, the IRS to use private debt collectors to recoup tax debt. After years of IRS budget cuts that resulted in a lean staff which is unable to sufficiently address collection matters, many view the law is a necessary evil. There are, however, concerns about the actions typically employed by private debt collectors as well as the fact that these collectors will have access to taxpayers' private information.
Not surprisingly, money is the driving force behind the decision to allow the IRS to use private debt collectors. This reasoning, however, is somewhat flawed considering that, from 2006 to 2009, the use of private debt collectors didn't result in any additional revenue being recovered. While the IRS reasons that private debt collectors will use a collection process similar to what the agency has being using, private debt collection agencies are notorious for employing tactics that, at best, are questionable and, at worst, downright illegal.
Any taxpayer that is contacted by a private collection agency that claims to be calling on behalf of the IRS would be wise to demand some type of formal verification. For those who wish to rectify and repay tax debt, it's important to never provide a private tax collector with a direct payment either via phone or U.S. mail.
For taxpayers who have questions or concerns about tax debt or who wish to dispute the amount owed, it's wise to contact an attorney who exclusively handles tax law matters.
Source: Forbes, "IRS Private Debt Collectors Are Now Legal: 10 Things You Should Know," Robert W. Wood, Dec. 7, 2015