IRS has contracted with private debt collectors to pursue overdue taxes. These calls will start this spring but no start date has been determined. This comes as another attempt for the IRS to gain revenue for past due taxes. In the 1990’s and 2000’s, this same effort was made by the IRS but instead of gaining revenue, they lost money. Once again, the IRS’s attempt to gain revenue for past due taxes comes with a biased opinion from taxpayers and tax professionals. With the number of IRS collector scams that have plagued the US, has consumer advocates worried that scammers may jump on the band wagon full force. A few months ago, scammers in India were arrested for scamming millions of dollars from US citizens wherein the scammers used tactics to scare and threaten the person of jail if they didn’t provide a non-traceable form of payment. However, scammers are still at work trying the scam the American citizens so it’s no wonder why people are skeptical of the IRS’s attempt to use private debt collectors to collect on past taxes.
According to USA Today Money Roger Yu, the IRS will hand over “inactive tax receivables” that are delinquent for accounts that are no longer actively pursued. By law, the IRS cannot collect on accounts that have no ability to pay the liability off. The IRS has alternative solutions to non-collectible accounts such as Offer in Compromise and Currently Not Collectible Status. The Offer in Compromise is ideally the resolution taxpayer’s would want. Currently Not Collectible Status is a temporary status until the taxpayer’s financial situation changes. This status prevents the IRS from collecting on the debt until the account is reviewed, usually two years or until the taxpayer incurres a new tax liability. According to resources, there are approximately 380,000 taxpayer’s accounts that will be assigned to the private collection agencies. The private collection agencies are not able to provide alternative tax resolution. Their sole purpose is to collect as much revenue as possible on behalf of the IRS.
Typically, the IRS will never contact taxpayer’s via telephone unless they have sent correspondence first to advise of the past due taxes. Even then, the IRS send several letters reminding taxpayer’s of their past due taxes before alternative collection (wage garnishment, bank levies) occur. The IRS will send correspondence to taxpayers whose accounts have been assigned to private collectors advising them that their accounts have been assigned to a private collector. The private collectors are not required to show proof that they are a collector for the IRS and skeptics are weary of the potential scams that may and most likely will occur. The private collection agencies are not required to advise the taxpayers that they may qualify for an alternative tax resolution such as an Offer in Compromise or Currently Not Collectible Status. If the collection agencies are advised not to disclose this information to taxpayers, what should a taxpayer do? Contact the IRS directly or contact our office for a free consultation either over the phone nationwide, or in our office location in Sacramento, California.
Don’t be a victim of potential scammers. Know your rights as a taxpayer.
