The Internal Revenue Service plans to hire private collections agencies to collect certain overdue taxes. The collections could start this spring.
The IRS says private collection agencies will work on accounts where taxpayers owe money, but the IRS is no longer actively working them.
The four companies selected to do this are:
--CBE Group of Cedar Falls, Iowa.
--Conserve of Fairport, N.Y.
--Performant of Livermore, Calif.
--Pioneer in Horseheads, N.Y.
The IRS says it will give taxpayers and their representative a written notice that the accounts are being transferred to the private collection agencies.
The agencies can then a second, separate letter to the taxpayer and their representative confirming this transfer.
Private collection agencies will be able to identify themselves as “contractors of the IRS collecting taxes.”
Donald Cohen, executive director of In the Public Interest, says his group opposes private collectors.
The process “is like turning over tax collection to your local check-cashing company,” he tells KTRH. “And that would be a terrible idea.”
The National Treasury Employees Union, which represents IRS workers, says the effort is beginning as tax-related telephone scams have surged and the problems that plagued previous privatization efforts have not been addressed.
NTEU President Tony Reardon says the IRS should instead retrain existing employees set to lose their jobs as paper tax return processors.
“The use of PCAs to collect tax debts has repeatedly been shown to be a waste of taxpayer dollars,” Reardon told NewsRadio 740 KTRH. “The 1996 pilot was so unsuccessful it was cancelled after 12 months. Contractors participating in the pilot programs were found to have regularly violated the Fair Debt Collection Practices Act, and the program resulted in a $17 million net loss.”
Reardon added: “The IRS again attempted the use of PCAs to collect federal taxes in 2006. While the program was projected to bring in $2.2 billion in new revenue, data from the IRS showed that the program resulted in a net loss of almost $4.5 million to the federal government, after subtracting $86.2 million in program administration costs and more than $16 million in commissions to the PCAs.”
The IRS, however, insists that the people with the collection agencies will adhere to the Fair Debt Collection Practices Act and should be courteous to the taxpayers they contact.
Taxpayers will be informed about electronic payment options for taxpayers at IRS.gov/Pay Your Tax Bill.
If payment is by check, it should be payable to the U.S. Treasury and be sent directly to IRS – not to the private collection agency.
If you don’t want to work with the assigned private collection agency, you have submit a request in writing to the private collection agency.
There are exceptions:
The IRS won’t assign accounts to private collection agencies involving taxpayers who are:
--Under age 18.
--In a designated combat zones.
--Victims of tax-related identity theft .
--Under examination, litigation, criminal investigation or a levy.
With the change, the IRS still urges people to be wary of scam callers from someone claiming to be collecting on behalf of the IRS. In these cases, scammers pretend to be IRS agents and demand immediate payment.
The Better Business Bureau has offered the following tips to avoid current and future IRS scams resulting from this change:
--Always check with BBB if you suspect a scam. Consumers can also report scams at bbb.org/scamtracker. It is a scam if someone calls to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS will first mail you a bill if you owe taxes.
--The IRS will never make immediate threats to involve local police or other law-enforcement groups to have you arrested for not paying. The federal agency will never demand anyone pay taxes without giving them the opportunity to question or appeal the amount they owe.
--IRS will never ask for credit or debit card numbers over the phone.