Congress Sics Private Debt Collectors on the Taxpaying Public

by Tom Buck

Those who pay close attention to this sort of thing are aware that part of the recently-passed tax bill resurrected an oldie, but not necessarily a goodie. A number of years ago Congress decided that the IRS was not doing an adequate job of collecting on tax balances due. It was decided to pass along older accounts that the IRS was not progressing with to private debt collection agencies.

Of course, the IRS was anything but pleased with this turn of events. Like any other bureaucracy, the power of an agency grows (at least) proportional with the increase in its number of employees. The federal employees’ unions were very upset to see the private sector taking away jobs from the agency. This is but one of a great many unfortunate facts of life when huge bureaucracies are in power.

As you may know, there are pretty strict laws about what debt collectors can and cannot do when trying to play hardball with a deadbeat creditor. As you might imagine, things occasionally got out of hand with the tactics used by the collectors.

I can tell you that my work as an advocate for taxpayers got considerably more difficult, and at times intense during those few years. It’s difficult enough to deal with an IRS employee, but at least most of these people have a clue about the tax law. That was not and will not be the case when we once again have to deal with people who have no experience with an IRS Code that exceeds 10,000 pages of small print and language seemingly intended to obfuscate the meaning and intention of the law.

After a few years, the program was disbanded. Now, for whatever unknown reason, Congress has once again authorized tax collection by private collectors. This will not make it any easier for people who simply want to get the IRS collection problem behind them.

As a professional with over thirty years successfully helping people with IRS problems of every possible kind, I don’t see how it will ever be possible for a taxpayer whose account has been handed to the private collectors to get the right deal – EXCEPT that you hire a professional who will keep at it until you are off the hook.

It will be interesting to find out how much power these collectors will have. As we all know, the IRS has some pretty draconian collection powers, e.g., levies on paychecks and bank accounts. Will these private agencies have any of the same sorts of authority? It remains to be seen. But if they do have these powers, we will have moved a long way down what I consider the wrong road as a country.

Over the years I have come to see the value and the necessity of these aggressive collection techniques by the IRS. Sometime it is necessary to hit the donkey over the head to get his attention. The levy almost always has such an effect. I have worked with numerous people who have finally come for help as a direct result of losing a paycheck or bank account.

There seem to be two kinds of people when it comes to taxes. Those who either are or want to be law-abiding citizens and those who are trying to take advantage of the tax law in some illegal fashion. The people who go too far in this direction become labelled as tax protestors by the IRS. Believe me when I tell you that these folks will have a much more difficult time if they should decide to come clean in the future.

Whether your approach is to abide by the law or otherwise, you could still be on the side of owing the IRS. My strong recommendation is that you be as pro-active as possible when dealing with IRS collection problems. If you just hang back and refuse to respond, you are more likely to have your case handed to the outsider.

I would prefer that none of my clients ends up there before coming to me, because I know getting the matter resolved will almost certainly be more difficult (and, unfortunately, more costly). I’ll try to keep you informed as we learn more about how these private debt collectors will act.

Please remember our motto: We defend our fellow citizens against our government by making sure the IRS obeys the rules.