Congress passed legislation in December 2015 that approved the IRS’s contracting with private debt collectors to collect certain debts. These private collection agencies can work on accounts where the taxpayer owes money and the IRS isn’t actively working on the account. That could be because the account is older or the IRS does not have resources to keep pursuing the debt. Unfortunately, scammers have historically posed as the IRS to target vulnerable seniors in order to get personal information or money.
The IRS would never harass consumers over the phone. But this new program allows private debt collectors to contact taxpayers by phone. This may make it harder to know if a scammer is targeting the taxpayer.
Both in 1996 and 2006, the IRS tried to use collection agencies. However, both times, the programs failed, with the most recent attempt costing millions more than it took in. In addition, the program created thousands of complaints—one of which was the horror story about an older couple who received more than 150 phone calls in less than a month. Some changes were made.
The IRS will inform taxpayers by mail if it is turning their collection issue over to a private debt collector. The debt collector must also send a written notice, once it receives the taxpayer's information, and collection agencies are required to comply with all debt collection laws. These laws prevent debt collectors from harassing consumers. More information is found on the IRS website.
The IRS has contracted with these four debt collection companies:
- Conserve in Fairport, New York
- Pioneer in Horseheads, New York
- Performant in Livermore, California
- CBE Group in Cedar Falls, Iowa
In order to avoid scams, seniors should know that private collection agencies will only request payments to be made online at IRS.gov or by check. The checks should be made payable to the U.S. Treasury and sent directly to the IRS. They don’t go to the private collection agency. The collection agency won’t ask for payment on a prepaid debit card or gift card.
Reference: The New York Times (April 20, 2017) “I.R.S. Enlists Debt Collectors to Recover Overdue Taxes”