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Tax debt collection: What once was old is new again

There are so many sayings that seem to apply to our topic today. There’s the one in the headline. There’s also, once bitten, twice shy. And how about, the definition of insanity is doing the same thing over and over again and expecting a different result.

Back in April, word came down that the IRS had started turning over unpaid tax obligations to four private collection companies. As we noted in a post more than three years ago, Congress opted for such a strategy on two separate occasions in recent decades. It didn’t work well either time and many expressed concern that this new effort wouldn’t be any better. It seems they may be right.

And the complaints begin

Here we are just two months into the newest rendition of this regime and a small group of U.S. Senators has raised a yellow flag. These lawmakers, all Democrats, have written to one of the four collection companies stating that they’re worried its practices violate the Fair Debt Collection Practices Act and provisions of the IRS code.

The letter says the call scripts all four firms use under the IRS collection contract are troubling, but they say the scripts and practices of Pioneer Credit Recovery are of particular concern. Specifically, they allege that Pioneer pressures targeted taxpayers to settle in ways that could hurt them financially – putting the debt on a credit card, taking out a home equity loan or borrowing from their retirement savings.

The senators also say the Pioneer scripts imply threats of action the law does not allow and fail to inform taxpayers of their rights to seek help from the Taxpayer Advocate Service.

The senators seem especially irked by these practices because 80 percent of the taxpayers targeted by the private collectors are working poor – making incomes below the federal poverty level.

One last concern of the senators is that Pioneer’s practices could leave taxpayers confused about whether they are dealing with a legitimate collection agency or possible scammers.

There is one good way for anyone dealing with tax issues to alleviate such concerns; that’s to work with skilled legal counsel.

Findlaw Network


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