Are IRS Debt Collectors Unlawfully Harassing Consumers?

We have previously discussed debt collection practices by the Internal Revenue Service (IRS) and changes to the law resulting in private debt collection companies handling unpaid tax bills. The new law that took effect, allowing for the use of private debt collectors for federal tax debt, faced much opposition from consumer advocates who voiced concerns about whether debtors would be treated fairly and whether these collection companies would abide by the Fair Debt Collection Practices Act (FDCPA). Now, according to a recent article in Forbes, “it appears those concerns were not unfounded.” A group of senators sent a letter to one of those debt collection companies concerning consumer complaints.
Are the debt collection companies with which the IRS contracts violating the FDCPA and harming consumers?
Senators Address Alleged FDCPA Violations in Tax Debt Collection
As the article explains, a group of senators, including Senator Sherrod Brown (D-OH), Senator Benjamin Cardin (D-MD), Senator Jeff Merkley (D-OR), and Senator Elizabeth Warren (D-MA), recently sent a letter to Pioneer Credit Recovery. Since the IRS has begun contracting with private debt collectors, Pioneer Credit Recovery has become one of the companies the IRS relies upon for collecting unpaid tax debt. In the letter, the senators expressed concerns that Pioneer Credit Recovery may be engaging in harmful debt collection practices. The letter cites the following:
  • Failing to adequately protect taxpayers from criminals posing as IRS agents;
  • Pressuring taxpayers into risky financial transactions;
  • Violating the Fair Debt Collection Practices Act (FDCPA) and provisions of the Internal Revenue Code; and
  • Violating IRS guidelines and provisions of Pioneer’s IRS contract.
That language comes directly from the letter, and it makes clear that the senators have serious concerns about consumer rights.
Specific Allegations Against Pioneer Credit Recovery
What, precisely, have the senators mentioned above alleged about Pioneer Credit Recovery’s practices? Using call scripts as evidence, the senators voiced concerns about some of the following practices:
  • Confusion between an actual IRS debt collector and a scam call: In the scripts used by Pioneer, debtors have only a five-day window when they have not yet received an official letter stating their debt from the IRS. Traditionally, consumers have been told that one way to identify a scam call is by noting such a short window for a response.
  • Unfair pressure from Pioneer: Noting that a majority of the taxpayers who owe the IRS (about 80 percent) are currently below 250% of the federal poverty level, the senators emphasizes that pressure from Pioneer to use money in a home or in retirement security, or to add onto current credit card debt, can be extremely damaging.
  • Threats from Pioneer about seizing payment for unpaid debts: The call scripts also suggest that Pioneer threatens consumers who have IRS debt that the debt collector “will have the means to seize payment involuntarily.” This, the senators suggest, could be a violation of the FDCPA.
The senators have asked Pioneer to modify its call scripts so that it complies with its IRS contract and with federal law.
Contact an Oak Park Consumer Protection Lawyer
If you have been harassed or threatened by an IRS debt collector, you should speak with an Oak Park consumer protection attorney to learn more about your options. Contact the Emerson Law Firm today for more information.
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