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Internal Revenue Service Resumes Use Of Private Debt Collectors

The United States Internal Revenue Service (IRS) recently announced that it will be shortly reviving the practice of using private debt collectors to collect overdue payments. The IRS stopped using private debt collectors in 2009 after it decided that IRS employees would be better at the task. But a law passed by the Congress in 2015 has required the IRS to resume the program.

The resumption comes amidst increasing reports of fake government agents contacting tax payers for payments. In a recent announcement, the IRS said that it will be soon turning over 100 cases per week to four debt collecting agencies. Over the next few months, the cases transferred to the agencies would reach 1,000 per week.

In the initial phases, the IRS will be handing over cases where the debt is lower than $50,000. Over time, the agency will be turning over larger and more complicated cases to the private agencies as per Bill Banowsky, who is heading the program for the IRS. The debt collecting agencies can retain 25 percent of what they collect.

WMUR-TV

The IRS is planning on sending out letters to tax payers whose cases are being handed over to these agencies in a bid to pre-empt any fraud. The private firms would once again send out letters to contact these taxpayers before calling them.

In a statement, Mary Beth Murphy, head of the small-business and self-employed division atthe IRS said,

The IRS remains extremely concerned about the many con artists out there who masquerade as IRS employees or contractors. We urge everyone to be on the lookout for scammers who might use this program as a cover to swindle taxpayers.

Spurious calls totalling nearly 1.3 million have been reported since 2013 according to the inspector general for tax administration. The scammers demand money towards unpaid taxes threatening jail for non-compliance.

So far over 10,300 victims have paid out nearly $55 million to such criminals. The Justice department recently announced that it was charging 61 individuals from domestic and international locations for fraud.

The use of private debt collecting agencies has evoked strong opposition amongst many including union workers, some legislators and an independent ombudsman, the National Taxpayer Advocate, which believes that the program doesn’t have sufficient safeguards for struggling taxpayers.

Tony Reardon, national president of the National Treasury Employees Union stated that policy would have the same results as before when collection agents would harass taxpayers, many of whom are actually in need of assistance.


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