Does the IRS Use Private Debt Collectors?

 Posted on July 25,2017 in Taxation Law

The IRS recently announced that it will begin contacting people regarding back taxes through private debt collection agencies. However, these private collection agencies will only be used for limited types of cases. However, with any entity that tells you it is working on behalf of the IRS, it is still wise to question the contact's validity—many people claim they are “working on behalf of the IRS” as part of an IRS scam.

Still, with this new change, there are ways to protect yourself if you are contacted by a legitimate private debt collector.

Details of the Initiative Using Private Debt Collectors 

There are four private collection agencies that are authorized by the IRS to contact taxpayers when money is owed but the IRS is no longer actively working the account. These include accounts that are older and when the IRS does not have the resources to work on them.

In order to give affected taxpayers warning about this change, the IRS will provide written notice to the taxpayer and his or her representative that the account is being transferred to a private collection agency. Also, the agency will send a separate letter confirming the transfer. 

A taxpayer can request, in writing, that his or her account be transferred back to the IRS.

Reaction to the Use of Private Debt Collectors

Many consumer groups are concerned that the IRS is partnering with private debt collection agencies. First, these agencies have a poor reputation because of the aggressive tactics they use, and consumer groups are worried that this new initiative will expand the number of people subjected to these coercive practices.

Second, it may be the case that those who owe taxes qualify for IRS programs that would reduce their obligation, and private collectors may not tell the taxpayer about these options.

Others believe, however, that private debt collectors could be helpful in some situations. For example, the private collectors may be more open to negotiating a settlement amount than an IRS agent. Thus, it may be prudent to explore your options with a private debt collector rather than opting back into the IRS.

Call a Santa Clara County Tax Collection Lawyer

If you are being contacted by private debt collectors for back taxes and you are unsure if it is part of a scam or would like advice on how to negotiate with them, an attorney can help. Our firm has also helped many clients who owe back taxes to the IRS. 

The accomplished San Jose IRS tax debt attorney at John D. Teter Law Offices can be reached at 408-866-1810.

Sources:

https://www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection

http://www.nbcnews.com/business/consumer/irs-just-hired-private-debt-collection-agencies-chase-down-your-n747236