CP40 form From IRS We assigned your overdue tax account to a private collection agency

The IRS Won’t Call You. They hired Debt Collectors to do that for them!

Congress Mandates IRS Use Private Collection Companies to Collect Past Due Taxes Beginning Spring 2017

 

CP40 form From IRS We assigned your overdue tax account to a private collection agency

Poor Eric!

I Received A Collection Letter Regarding My Taxes

IRS Now Uses Private Collection Agencies

As part of a law passed in December of 2015, the IRS will begin using private collection agencies as of Spring 2017. The IRS has actually had the option to use private agencies and had DECIDED NOT TO. As the taxpayer advocate mentions in her 2013 report, it was not very effective. However, Congress decided that they know better and passed a law that states the IRS SHALL use private collection agencies. The idea is to remove some of the cost of collection from the IRS and lower the impact on “government spending”.

5 Reasons Why IRS Using Private Debt Collectors Is A Bad Idea

  1. INCREASE IN IRS SCAM ACTIVITY. Previously, when people received scam calls from fake IRS agents, the IRS would release notices stating that they will never call you and any call is a scam. However, now that they are using private collection agencies, there will be legitimate calls regarding IRS debt. This plays right into the hands of scammers and con artists!
  2. PRIVATE DEBT COLLECTORS HAVE LESS POWER THAN THE IRS. Debt Collection Companies must follow the Fair Debt Collection Practices Act. The IRS only has to follow it’s own policies and procedures and has powers way beyond a collection agency. On top of that, the tax debt collection agencies will have to follow BOTH Fair Debt Collection laws AND IRS policy and procedures.
  3. THE PEOPLE CAN’T PAY. The accounts the IRS plans to pass onto the collection agencies are those that are grossly past due. These people couldn’t afford to pay when it was the Federal Government asking, the money isn’t magically going to appear because a debt collector called.
  4. IRS USING PRIVATE DEBT COLLECTORS HAS FAILED BEFORE. That’s right, they already tried this! and Failed! When the IRS used private debt collectors between 2005 and 2009, they eventually concluded that it wasn’t cost effective – after they were committed to the idea for a while.
  5. IT’LL PUSH PEOPLE TO BANKRUPTCY. When you have already had the weight of tax debt hanging over you, the additional burden of constant calls from a debt collector could be the final straw that pushes people to bankruptcy. Bankruptcy isn’t a guaranteed solution to tax debt, but many more people will begin looking into it with tax collectors calling.