This month, the IRS will be turning over old tax debts to private collection agencies to pursue those who owe the government money. This is not new strategy as it was tried about twenty years ago during the Clinton administration with no success and again during the Bush administration with a similar outcome. But Congress being Congress decided to take a third bite at this rotten apple, passing a bill in 2015 allowing the IRS to pursue this method yet again. So what’s the big deal about private collection agencies attempting to collect IRS debts? Simply, it is an invitation for scammers to engage in fraud.
Nina Olson, the National Taxpayer Advocate, recently stated that past attempts to collect debts focused on taxpayers who fell into the “below poverty level” category.
“Nearly eight out of ten taxpayers pursued by the private collectors had no money”, Olson noted. Meaning that no amount of phone calls, letters or emails from these companies can produce money from people who don’t have it. In fact, Olson stated that the program was a total bust.
"Based on what I saw, I concluded the program undermined effective tax administration, jeopardized taxpayer rights protections, and did not accomplish its intended objective of raising revenue. Indeed, despite projections by the Treasury Department and the Joint Committee on Taxation that the program would raise more than $1 billion in revenue, the program ended up losing money. We have no reason to believe the result would be any different this time", wrote Olson.
There will be four agencies making attempts to grab over-due taxpayer dollars. So very soon, the IRS will be sending overdue federal tax accounts to one of four debt collection agencies: CBE Group of Cedar Falls, Iowa; Conserve of Fairport, N.Y.; Performant of Livermore, Calif.; and Pioneer of Horseheads, N.Y.
These agencies are not permitted to collect money directly but are allowed to identify themselves as IRS contractors. Collectors are allowed to lay out payment options to debtors but they must pay directly to the IRS using check or electronically. Here is where the problem comes in.
Scammers, as in the past with the previous attempts made by the IRS using collection agencies, will pretend they are calling from the company and persuade people to send them non-existent back taxes through a wire transfer or debit card. They may also attempt to secure social security numbers, credit card numbers or other personal information in an attempt to steal your identity.
For more information on this new program, click on this link to the IRS: Private Collection of IRS Debts