Did paying back taxes or tax debt just become easier?

On Behalf of | Oct 27, 2019 | Back Taxes or Tax Debt

Owing money to the IRS is not an attractive prospect for anyone here in Danbury or elsewhere. Even so, many people do. The agency now uses private debt collection agencies to collect back taxes or tax debt, and recently instituted a new way to set up multiple payments with one phone call.

Danbury taxpayers wanting to use this system would authorize the private collection agency to make payments to the U.S. Department of the Treasury in certain amounts on certain dates. The IRS says the preauthorized direct debit program gives taxpayers the opportunity to make one phone call and one authorization. They will not have to think about making their payments again.

The PCA than provides the taxpayer with a letter outlining the terms of the arrangement. It then sends out a secure check to the IRS on his or her behalf according to the agreed upon schedule, taking the money directly out of the individual’s bank account. Even as the IRS announced this new program, it also issued a warning to watch out for scammers who may take advantage of this new system to steal money and identities from unsuspecting people. The IRS currently only works with four debt collection agencies who agreed with the federal taxing authority to follow the rules of the Fair Debt Collection Practices Act and abide by the Taxpayer’s Bill of Rights.

This new payment option may appeal to many taxpayers, but before committing to releasing sensitive information to anyone, a thorough review of the situation may be in order. Paying back taxes or tax debt in this manner may not be in the best interests of certain individuals. Even though the agreement can be cancelled up to one business day before a payment’s scheduled date, something could still go wrong. Moreover, before agreeing to pay any such taxes, it would be prudent to make sure the debt is actually owed since even the IRS makes mistakes.