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Back Taxes Owed to IRS Now Collected by Private Debt Collectors

Aug 17, 2007
According to a New York Times article that was released August of last year (2006), I.R.S. back taxes and delinquent taxes under $25,000 or less owed by taxpayers will now be attempted to be collected by up to three private collection agencies.

Two weeks after the article was published, data on 12,500 overdue taxpayers was turned over to the three private collection agencies.

Paying Private Tax Collectors to Collect From You
The article explains that although I.R.S. official representatives agreed at the time that this will be more costly than collecting this "low hanging fruit" by using internal means, they felt as though Congress forced this step by not allowing the hiring of more revenue officers.

These private collection agencies are expected to rake in upwards of $1.4 billion over a ten year period, with the agencies about $330 million of the sum. Do you want to give these companies a portion of your hard earned money instead of paying the I.R.S. in full or at a reduced negotiated rate for your tax obligation?

I.R.S. Email Scams & Telephone Fraud -
Law makers and IRS agents who were against this privatization plan said that by involving these collection agencies there is a greater chance for abuse of the system.

With private companies in the mix, they said, debtors could more easily be tricked into paying money to scam artists calling the debtor on the phone or sending an I.R.S. e-mail scam. I.R.S. e-mail scams were a popular scheme among hackers and opportunists in 2005.

Nina B. Olson, an I.R.S. taxpayer advocate, warned Congress earlier this year,

"Because private collectors will operate under rules of profit maximization rather than the I.R.S.'s customer-service based policy, the private collectors may have less incentive to safeguard taxpayer rights."

Unmentioned I.R.S. Tax Penalties -
Al Cleland, a retired I.R.S. tax collector in Minnesota, predicted that using private collectors would cause some debtors to owe more than he/she did originally,

"We always told people to get current on their taxes first, so they would not have more penalties added, and then work on paying off their back taxes," Mr. Cleland said. "A private collection agency has no incentive to tell taxpayers that, so people will pay more penalties."

The private debt-collection agencies are outside the budget rules for Congress because, except for the start-up costs, the collectors are to be paid from the proceeds - commissions on your overdue taxes.

I.R.S. News Commentary -
You read it right folks. These agencies will make every effort to contact you because it puts a portion of your owed tax money in their pockets. Why else would a company volunteer for such a thing? Civil service duty? Being a good corporate citizen?

These companies have no reason to make you aware of penalties and time tax amnesty deadlines or even work with you and the I.R.S. Settle your debts in a more reasonable fashion by using offers in compromise and/or I.R.S. payment plans with our help.

The Future of I.R.S. Debt Collection -
You now have more reason than ever before to get delinquent taxes taken care of with the I.R.S. before these companies annoy, pester, and threaten you by phone calls and letters.

It is a sad state of affairs, but I.R.S. debt collection privatization is the new direction of the federal government. The original New York Times article stated that by 2008, about 350,000 past-due tax records will be distributed among about 10 private debt-collection agencies.

This problem is not going away any time soon. Get started by learning about your I.R.S. debt options and contact us today for your free tax help analysis.

Resources -
The New York Times
About the Author
Neil Lemons represents Allied Tax Solutions, a 30 year leader in IRS & tax help as well as tax relief solutions. For more information or a free consultation visit http://www.alliedtaxsolutions.com.
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