Private Debt Collectors and Your Tax Payments

If you currently owe taxes and are not making regular payments, you may need to think about how those debts will be collected over the coming months and years. According to a recent article in Forbes Magazine, you may be getting calls from debt collection agencies seeking to recover your tax debt. Did you think the Internal Revenue Service (IRS) was required to abide by different guidelines when it comes to consumer debt collection? Generally speaking, the IRS’s methods of collecting on tax debt do not necessarily look like the debt collection practices of many other creditors. Yet a new law may mean that the IRS turns to private debt collection companies to recover what it is owed.
New Law Could Change Methods of IRS Debt Collection
According to the article, President Obama’s decision to sign into law the Fixing America’s Surface Transportation Act could impact the ways in which the IRS collects debt. The new law does not deal specifically with tax debt. However, it “contains a pernicious scheme to raise revenue,” the article argues, and “requires the IRS to use private debt collectors.”
For quite some time, the IRS has been able to choose whether or not to use outside contractors (or private debt collectors) when it comes to collecting tax-related debt. However, the new law “makes it mandatory in some circumstances.” When must the IRS use the services of private debt collectors under the new law? The following represent some examples of situations in which consumers may receive calls about tax-related debt from private collection companies:
  • The statute of limitations is about to run out for collecting the debt; or
  • The IRS previously has not been able to collect the debt owed.
As the article emphasizes, “the bottom line is that you’ll see a lot more debt collectors going after citizens who owe taxes.” And while the IRS is not necessarily a popular agency with most Chicagoans, we do generally expect that the IRS will handle debt collection in a manner that does not appear to involve harassment or other illegal methods. For the IRS, “there are rules and procedures for interacting with taxpayers.” But handing over debt collection to private companies could mean that Chicago residents will experience more interactions with debt collectors that appear to violate the Fair Debt Collection Practices Act (FDCPA).
Private Debt Collection and the Fair Debt Collection Practices Act (FDCPA)
Consumer advocates are concerned that private debt collection companies hired to collect tax debts will not treat consumers fairly. While the FDCPA is aimed at protecting debtors from certain methods and means of collection, history has shown us that many private collection agencies violate the terms of the FDCPA.
In addition to unfair debt collection practices, business experts contend that private debt collection often does not result in a debt being paid. As a result, putting citizens’ tax debts in the hands of private collectors may simply mean that the IRS does not recoup what it is owed, and consumers may be treated unfairly in the process.
That more Americans may be getting collection calls about IRS debts does not mean that all of them are accurate, however. Chicagoans should keep in mind that “there have been many—and I mean many—instances of people claiming to be calling from the IRS, engaging in phone scams.” If you have questions about your rights as a consumer, you should speak with a dedicated Oak Park consumer protection lawyer as soon as possible. Contact the Emerson Law Firm today.
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