After years of telling taxpayers that they would never call about an overdue tax return or tax bill, things have changed. Now, you could actually get a call from a collection agency for an outstanding tax debt. The IRS has begun to outsource collection of some older debts to four private debt collectors (PDC).
The purpose is to supplement the IRS’s limited resources. Unfortunately, the subcontracting companies aren’t using any discretion in who they attempt to collect money from. An individual who is unable to pay can ask the IRS directly for a hardship deferment, but that’s not the case with a PDC. They must still follow the law as laid out in the Fair Debt Collection Practices Act.
Watchdog group Taxpayer Advocate stated in their 2017 report to Congress that 19% of the taxpayers the PDCs collect monies from are actually people who are below the poverty line, with a median income of $6,386. TA also found that 44% of the taxpayers had income below 250% of the poverty line.
Congress created this outsourcing program to recover $138 billion that the government is owed, and to address other budget shortfalls. The companies are allowed to keep some of the money they recover on behalf of the IRS.
The IRS has contracts with four PDCs:
As of June 2018, more than 500,000 cases were outsourced to one of the PDCs. These cases are considered “inactive accounts,” which are more than 3 years old, and considered “more difficult to get settled.”
How effective is the program? To date, the program has brought in about $51 million in revenue, according to some recent reports. But this isn’t the first time the IRS has outsourced tax collection to PDCs. The IRS also contracted with PDCs from 1996-1997 and from 2006-2009 for federal tax collection, with a limited amount of success.
It’s true that the IRS would never call you about an overdue tax bill. A PDC will call, but not until after the IRS makes contact.
The IRS sends out multiple notices informing a taxpayer of the overdue debts, including informing you that your account is being transferred to the outsourced agency. They also give you the opportunity to appeal–by mail. But when the PDC calls, you may not be sure who you’re talking to. Because they will ask for your Social Security number, you may also be talking to someone with the intent to commit fraud. How can you tell if the call is legit? You can’t–and that’s where problems can start.
Scam artists have picked up on the idea and have used it to threaten people with arrest warrants and other scare tactics. This article from Kim Komando offers advice on telling the difference between a real call from a PDC and a scam call, including five ways to tell if the call is fake.
The Law Offices of Jibrael S. Hindi has litigated hundreds of cases on behalf of consumers who were wronged by debt collectors. Our expert FDCPA attorneys are willing to take on even the most intimidating collection agencies to fight for the justice you deserve. A successful FDCPA case can award you up to $1,000 in financial compensation. Don’t let debt collectors get away with taking advantage of you. Contact our office today at 1-844-JIBRAEL for a free case evaluation. Remember, there are no attorney fees unless you get paid.