How (And Why) Does the IRS Use Private Debt Collectors?

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If you’ve ever dealt with a debt collector, you know that there’s a fine line between recovery efforts and full-on harassment. Unfortunately, such harassment may accompany future efforts to collect tax debt; the IRS recently reactivated a program that relies on private debt collectors.

How Private Tax Debt Collection Works

Congress recently approved four private businesses to carry out debt collection efforts: CBE Group, Performant, Conserve, and Pioneer.

According to the official IRS website, only a small group of delinquent taxpayers can be contacted by private collectors. To be eligible for contact from a private firm, the delinquent individual or business must already have been contacted by the IRS on multiple occasions.

The House recently approved legislation exempting many low-income individuals and families from private tax collection. This legislation was largely a response to recent criticism claiming that private tax collectors unfairly target the poor.

For those eligible, collection action begins with notification of the private collector’s new role. The chosen firm should also send the delinquent individual a letter confirming account transfer. Private collectors may proceed with discussing strategies for resolving tax debt.

Why Private Debt Collection?

Ultimately, the use of private collectors instead of civil servants comes down to disagreements regarding what functions, exactly, the government should fulfill. Congressional Republicans believe that, by privatizing debt collection, it’s possible to streamline government functions and cut costs. The ultimate goal is to resolve tax debt removed from the IRS active inventory due to a previous lack of resources.

Whether or not private debt collection fulfills this stated mission of cost-cutting, it could very well impact you if you’re currently behind on your taxes.

If you’ve been targeted by a private debt collection firm on behalf of the IRS, it’s critical that you discuss your situation with an experienced enrolled agent before you proceed. Call Highland Tax Resolution today at 720-398 to learn more about your options.