Get ready to pay back some money!
A new Internal Revenue Service (IRS) private debt collection program has been authorized by Congress to collect overdue federal tax debt as early as spring 2017. The mandate was to pursue these unpaid taxes that the IRS is not actively pursuing, while respecting taxpayer privacy and rights. Once again, Congress has approved using private debt collectors having tried before with mixed results. As a condition for being chosen, the four approved companies must follow the consumer protection provisions of the Fair Debt Collection Practices Act.
However, the new program creates an issue. “Tax collection is a basic function of government and should be carried out by government employees,” stated Chuck Marr, the Director of Federal Tax Policy at the Center on Budget and Policy Priorities. Critics/people including Chuck Marr and Senator Bob Menendez believe that the new program is a mistake and an awful idea because back in 1996-1997 and 2006-2009, when the IRS used private collectors, it was not that successful (i.e., did not generate revenue in 2006-09). Others believe that the new program will open new doors for telephone scammers; tax scams are considered to be one of the fastest growing IRS problems. Taxpayers should know that the IRS contacts taxpayers by mail to notify them about unpaid tax debt.
So will this idea of hiring private tax collectors be more successful during this year? Will it fail again? Should the government find another way to solve this issue of people not paying their taxes?
Here are some key points to keep in mind:
- Private collectors will first contact taxpayers by mail.
- When the private collector identifies the correct address of the taxpayer, he/she will ask for a full payment by a telephone call. If the taxpayer cannot pay the full amount, the private collectors will offer of an installment plan.
- Private collectors cannot accept payment – do not pay them directly.
- The Fair Debt Collection Practices Act applies to these private collectors (Debt Collection Practices § 1692a- § 1692p).
- If you have a large federal tax debt, you will have difficulties you’re your foreign travel because under the law the IRS has the power to revoke your passport.
By Phatryna Suon, Alfred University, B.S. Accounting 2017