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IRS to Outsource Debt Collections… Again

IRS Outsources Debt Collection

A law that went into effect this year requires the IRS to turn over certain unpaid tax bills to private debt collection agencies. It is worth noting that this time around it is a law, rather than IRS policy, and that the law was pushed through despite the fact that privatization has failed in the past and despite the concerns raised by both TIGTA (Treasury Inspector General for Tax Administration) and Nina Olson, the National Taxpayer Advocate.

Concerns have also been raised by several US Senators who initiated an investigation of Pioneer Credit Recovery, one of the outsourcing firms. The Senators have found that Pioneer may be failing to protect taxpayers from criminal scammers, by not differentiating themselves enough. They also have been found to violate the Fair Debt Collection Practices Act as well as the IRS code and IRS guidelines. Other firms that the IRS has outsourced to are CBE, ConServe, and Performant.

The Taxpayer Advocate has reported that a disproportionate number of the taxpayers being targeted are poor–⅓ reported income below $20,000, and 80% are below 250% of poverty level. Pioneer has been the only firm known to use unethical pressure tactics–such as pressuring taxpayers to use credit cards, or give up their homes or retirement accounts–in order to pay the IRS.

In order to know if you are receiving a legitimate collection call and not a scam, here is what you need to know:

  • The IRS will send you a letter if your account is being sent to a private collection agency. Your first contact will not be from the collection agency.
  • Private collection agencies must follow the law, specifically the Fair Debt Collection Practices Act. Calls can only be made between 8 am and 9 pm. Contact cannot occur at any unusual or inconvenient time or place.
  • Payments should be made to the IRS–not to the collection agency. It should be obvious that taxpayers will not be asked to pay using gift cards, iTunes cards or wire transfers if the collector is legitimate. Never give your credit number out over the phone.
  • Private debt collectors are limited in their authority. Unlike an IRS Revenue Officer, they cannot take enforcement action like placing a lien or issuing a levy. And they cannot threaten arrest or deportation.

To read more on how to protect yourself from becoming a victim of IRS related scams, read our blog “Protect Yourself from an IRS Scam”

  1. hi!1 thanks great guidance!

  2. Thanks great !!

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