IRS Using Private Debt Collectors

The Internal Revenue Service (IRS) announced that they will be using private debt collectors to assist in collecting millions of dollars in past due federal taxes. They began outsourcing collection efforts in April of 2017, handing over about 100 accounts a week, culminating to a transfer of 140,000 accounts total. CBE Group, Performant, Pioneer Credit Recovery, and ConServe are the four agencies entrusted to get the job done. The agreement entitles them to up to 25% of what they collect.

In the past, the IRS would only assign accounts to private debt collectors if they were delinquent for over two years and with tax liabilities below $50,000. The idea to pursue such a large-scale endeavor was not one met with open arms, but the IRS did not have much of a say in the matter. The requirement came out of the Fixing America’s Surface Transportation (FAST) Act of 2015, which was met with strong opposition due to prior failed attempts.

Past Attempts to Use Private Collection Agencies (PCA)

Business law attorney Tanya Hobson-Williams stated that “There is little to no evidence that hiring debt collectors will be a savings to the public.” She continued to say “The IRS has attempted this outsourcing in the past without success, and has failed to show how this time would be any different than their past attempts.”

In 1996, the IRS initiated a similar program that barely lasted a year. In that short period, the IRS experienced a $17 million net loss and had some legal issues along the way. A few of the companies enlisted to collect debts were found using debt collection practices that violated the Fair Debt Collection Practices Act (FDCPA).

In 2006, they took another shot at using PCAs to collect overdue debts. This time around they were tasked with retrieving $2.2 billion. The program was canceled again three years later in 2009 after losing $86.2 million in administrative fees and $16 million in commission to the hired agencies.

The Risk of Outsourcing Debt Collection

How much money the IRS loses likely has little effect on your life personally, but the IRS outsourcing debt collection can put you at great risk for scams. Previously, you knew that the individuals contacting you regarding a debt were legitimate as they were employees of the IRS. With this alteration in collection procedures, an outside agency may now contact you for money owed to the IRS.

Scammers are aware of this system alteration and may use it to their advantage. For those who are aware of the change, there’s a high possibility that they lack knowledge of which particular PCA is managing their account. With this in mind, scammers may call you and claim to be collecting debt on behalf of the IRS, and get you to turn over funds if you aren’t careful.

One can also question the integrity of the PCAs the IRS acquired. Pioneer Credit Recovery, in particular, was fired by the Department of Education after they found that Pioneer made false statements to student loan borrowers.

The Florida TCPA attorneys at the Law Offices of Jibrael S. Hindi are here to protect your rights. Debt collectors are relentless in their collection efforts and will stop at nothing to get you to pay up. We can put an end to the harassing debt collection calls and get them to pay you! Contact us today for a free case evaluation.