Florida Elder Law & Estate Planning Blog


IRS calling? This time, it may be legitimate

May 18, 2017
debt

Consumer advocates are warning taxpayers about a new program that went into effect in April that permits the Internal Revenue Service to use private debt collection agencies. Targeted taxpayers will be those the agency has already contacted but who remain in arrears. The four companies are: Conserve – Fairport, New York; Pioneer – Horseheads, New York; Performant – Livermore, California; and CBE Group, Iowa.

The IRS tried twice before to use private companies to go after outstanding debts, without success. The last such effort, shut down in 2009, found that private collectors were not as successful as government employees in recovering funds. Nonetheless, legislation passed in 2015 calls for this third attempt.

 

According to some consumer advocates, the new program presents several dangers, and they warn taxpayers to be vigilant:

  • Because private collection agencies are paid on a commission basis for every dollar they recoup, they have little incentive to inform a delinquent taxpayer about forgiveness programs or other alternatives for which the taxpayer might qualify.
  • Heavy-handed tactics are another concern. In fact, in 2014 Pioneer’s parent company was fined $97 million for misrepresentations it made to students when it worked with the Department of Education to collect outstanding student loan debts (read the story here).
  • It will be easier for scam artists to impersonate collection agencies and attempt to defraud taxpayers into paying a debt that doesn’t even exist.

 

To protect yourself and your loved ones, you should keep the following points in mind:

    • If a private collection agency has been authorized to contact you, the IRS will send you a letter first, informing you about which of the four agencies will be calling. That letter will be followed by a letter from the company. Thus, if you receive a call from a private debt collector demanding payment for back taxes and you have not  received these letters beforehand, chances are the call is a fraud.

    • The agency that contacts you must abide by certain rules. You cannot be threatened with arrest by law enforcement for nonpayment. The caller must be courteous and respectful of your rights, per the Fair Debt Collection Practices Act.

    • If you have any question as to whether you actually owe any back taxes, call the IRS directly at 800-829-1040.

     

    Click here for more information from the IRS on its private debt collection program.