What Colorado Taxpayers Need to Know About the IRS’ New Army of Private Debt Collectors
Let’s cut the pretense – no one really likes tax season. It’s a time for nervous nail biting, seasonal hypertension and headaches, especially for those with unpaid taxes. Unfortunately, there is more bad news for those who owe Uncle Sam.
Starting spring 2017, the Internal Revenue Service (IRS) will begin using private debt collection contractors. Rooted in the FAST (Fixing America’s Surface Transportation) Act, the IRS has appointed four private companies that will work on its behalf to collect on outstanding accounts. The IRS hopes to assign 1,000 accounts a month to each collection agency. For taxpayers who are worried how this will affect their finances, what their rights are, and how to protect themselves from telephone scams, there are important things you’ll need to know.
Who Will Be Targeted?
The IRS hasn’t been completely forthcoming when specifying which accounts will be affected. They have outlined three scenarios which would result in an account being turned over to a private debt collector: older, inactive accounts; accounts in which the IRS has been unable to locate an individual, and; when lack of resources prevent the IRS from working on a case.
What can private debt collectors do?
While private debt collectors have been authorized by the IRS to operate in its stead, they also have to abide by the Fair Debt Collection Practices Act. In an effort to protect the rights of taxpayers and curb the abusive practice of debt collectors, the IRS appointed companies are prohibited from:
- Using abusive language
- Calling outside the hours of 8 AM – 9 PM
- Threatening arrest or other legal action
- Continuously calling to harass the debtor
- Calling the debtors’ place of work
- Communicate with anyone other than the debtor
- Calling the debtor after they have requested no contact
If you are being contacted and are encountering a collector who is not following the Fair Debt Act, then call one of our attorney’s as you may be liable to sue.
How do I spot a scam?
Knowledge is the best way to arm yourself against possible fraudulent callers who may be impersonating IRS debt collectors. Knowing what a debt collector can and cannot ask of you is key. A scammer will most likely claim that they can throw you in jail, if the debt is not paid immediately – remember that this violates the Fair Debt Act and so a real collector cannot make these demands. Perhaps most importantly, a real collector will not ask for payment, they can only direct you to pay any debts via the IRS online portal or write a check to the US treasury. So, if a caller is asking for your credit card or bank account numbers and directing you to make the payment out to their collection company, beware and do not comply!
Additionally, the IRS will notify a taxpayer that they are sending their account to a private collection agency. It is critical that you consult a tax attorney when you receive a notice transferring your case to a private debt collector.
The agency will then send a second letter, confirming the transfer and outlining how the taxpayer can pay their debt (see the above example letter). Only four collection agencies have been authorized by the IRS, they are – CBE Group, Conserve, Performant and Pioneer. If you get a call before receiving any official letters from the IRS, or are contacted by an entity not listed above, then be wary.
Know Your Rights
It is important to know your rights when dealing with an IRS debt collector. Here some things to know:
- If a taxpayer cannot pay immediately, then the collector can offer an installment deal, so long as it doesn’t exceed 5 years. Nevertheless, our attorneys have negotiated longer installment agreements, including partial pay installment agreements, with the IRS.
- There are some instances where a private collector cannot collect on an account, such as if the account is under audit, the taxpayer is deceased or under litigation, criminal investigation or is in a designated combat zone.
- If desired, you can write the debt collector and tell them you would rather work with the IRS directly. They are obligated to comply and must send your account back to the IRS.
- You can hire a tax attorney to represent you before the IRS and a private debt collector. Our attorneys can evaluate your options including settlement, penalty abatement and bankruptcy.
- If the IRS’s private debt collector violated the Fair Debt Collection Practices Act, you may have a private right of action against the collection company.
The FAST Act also allows the IRS to revoke your passport for accounts that are delinquent. Should you have any questions about your account, whether you’re dealing with a scammer or what your options may be, please contact our Denver Colorado Springs, or Castle Rock tax attorneys at R&H.
Our attorneys can represent you before the IRS and the private debt collector. As we have dealt with hundreds of cases, we know what is permissible and what is against the law. We can evaluate all your options and give you an unbiased opinion on how best to move forward.
Don’t wait until your wages are garnished or your bank account is levied, or a lien is filed against your home. Call now to get your free initial consultation with an R&H tax attorney.