There is bad news for those who are behind in paying tax debts — the Internal Revenue Service (IRS) is taking a hard line against taxpayers who have certain overdue tax debts by hiring private debt collectors to do their collecting. These private collectors are allowed to use tactics and methods that government agents are normally forbidden to use.
The reason most people owe back taxes is that they do not have the money to pay them. However, even if you find yourself drowning in debt to the extent that you don’t have the money to pay your taxes, there are things you can do to help.
The skilled and seasoned Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer understand that financial problems can happen to anyone. We offer a free consultation to develop a debt-relief plan that’s best for you. Call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or email for your free consultation.
What the IRS is Doing
The IRS has currently hired four private collection firms to deal with severely delinquent cases. These agencies will work on accounts that the IRS is no longer actively working, including older, overdue tax accounts, or in situations where lack of resources prevents the IRS from working the cases.
Cases are being assigned to the following private collection agencies:
- CBE, Waterloo, IA 50704, 1-800-910-5837
- ConServe, Fairport, NY 14450-0307 1-844-853-4875
- Performant, Pleasanton, CA 94566-9045 1-844-807-9367
- Pioneer, Horseheads, NY 14845 1-800-448-3531
The IRS states that it will give taxpayers and their representative written notice that the accounts are being transferred to the private collection agencies. Then the agencies will send a second, separate letter to the taxpayer and their representative confirming this transfer.
The IRS says private collection agencies should identify themselves as contractors of the IRS collecting taxes and that they must follow provisions of the Fair Debt Collection Practices Act and be courteous and respect taxpayer rights.
More information on the program can be found on the IRS website.
The Problems With Private Collectors
While the IRS claims having private collectors should help alleviate stress and prevent harassment that taxpayers have dealt with in the past, the strategy can sometimes cause additional problems, including:
- Costing taxpayers money. The IRS has tried using private collectors twice before and had to stop both times. Due to high administrative costs and commissions to debt collectors, the project lost over $2 million in 2006.
- The collection companies employ aggressive collection tactics that can be borderline abusive. Despite the requirement of courtesy, collection agencies often make harassing phone calls, send harassing letters, and make threats. All four collection agencies authorized so far have had numerous complaints against them with the federal Consumer Financial Protection Bureau.
- Difficulty communicating with the IRS. Due to reductions to their operating budget, the IRS has been cutting back on services to taxpayers, who must wait on hold for an extended duration.
- Taxpayers can become confused due to the recent wave of telephone scams in which fake IRS agents call taxpayers, tell them they owe back taxes, and attempt to get them to send money under the threat of going to jail. The IRS claims it will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities in light of these phone scams, but it is easy to see where taxpayers can make mistakes and send money to callers claiming to be IRS agents.
What the IRS is Doing
The IRS website has advice on how to avoid potential scammers:
- Be on the lookout for unexpected scam phone calls from anyone claiming to be collecting on behalf of the tax agency. The IRS says that, even with private debt collection, you shouldn’t receive unexpected phone calls from the IRS demanding payment. The IRS always sends several collection notices through the mail before making phone calls.
- Be aware that collection agencies will only be calling you about taxes that you know you have and you’ve been aware of for years.
- Private collection agencies will not ask for payment on a prepaid debit, iTunes or gift card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.
There are accounts that will not be assigned to private collectors, including those involving taxpayers who are:
- Deceased
- Under 18
- In combat zones
- Victims of tax-related identity theft
- Currently under examination, litigation, criminal investigation or levy
- Subject to pending or active offers in compromise
- Subject to an installment agreement
- Subject to appeal
- Classified as innocent spouse cases
- In presidentially declared disaster areas and requesting relief
TIGTA Hotline
To make a complaint about a private collection agency or report misconduct, call the TIGTA hotline at 800-366-4484 or visit www.tigta.gov.
To report a threat, assault or attempted assault by a private collection agency employee, contact the TIGTA Office of Investigations for your geographic area.
Contact Us for Help
If tax woes are adding to an already difficult financial burden, bankruptcy may be a solution you should consider. While generally you can’t discharge (eliminate) tax debt in bankruptcy, there are some exceptions where you may be able to discharge taxes that are more than three years old.
A Chapter 7 bankruptcy is considered to be a “fresh start” bankruptcy, as it enables you to discharge most or all consumer and/or business debts. By discharging your other debts, the bankruptcy may put in you a position to meet your taxes. Also, IRS and local tax debts may be dischargeable through Chapter 7 bankruptcy if the tax debts meet certain requirements.
Tax codes are complicated, so in any case, it pays to consult with a bankruptcy lawyer who knows whether the intricacies can work in your favor.
The skilled and seasoned Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer understand how difficult it can be to deal with debt. We offer a free consultation to evaluate your financial situation with the IRS, the State of Ohio, and other debt problems, and devise a debt-relief plan that’s best for you.
Delaying can only make your situation worse, so call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or email today to set up your free consultation so we can determine what debt relief solutions will help you.
