Today TaxMama hears from Brent Clanton on the BizRadio Network in Texas, who wants to know about the new program IRS has instituted, contracting out collections services to private collections agencies.[Note: We will be adding the audio once we get the feed from the BizRadio Network later today.]
Brent brought up a really good issue. And this is going to matter to you, or someone in your family, or one of your good friends. So, pass this on to those who need guidance when the collector comes a-knockin’ on their door.
Back in March, IRS chose three companies — CBE Group Inc., in Waterloo, Iowa, Linebarger Goggan Blair & Sampson LLP in Austin, Texas, and Pioneer Credit Recovery Inc., in Arcade, N.Y., — from 33 bidders. Pioneer Credit is a subsidiary of SLM Corp., commonly known as Sallie Mae. The IRS plans to expand the program to as many as 10 companies in 2008 with a goal of collecting $1.4 billion over 10 years, according to IRS spokesman Terry Lemons.
I love the fact that IRS is entrusting Sallie Mae to collect delinquent taxes. How are they doing with their present function – to collect student loans? The folks who, by 1999 had over 25 BILLION dollars (see page 3) in outstanding student loans? Yup, those are the very folks I want collected taxes for me. Don’t you?
Things you should know about this new system.
General things and safeguards:
·The private agencies will get 22 to 24 percent of the tax money they collect.
·They will not have access to your IRS files.
·25 IRS agents are assigned to this team to pull records and information or to look up and/or verify information provided by the taxpayers.
·Employees at the three companies chosen for this program are subject to background investigations.
·Disclosing taxpayer information illegally is a felony, punishable with fines and imprisonment.
·Contractors cannot use any information they learn during a tax collection case to go after anyone’s other unpaid debts, which means they will have to have separate staff dealing with the IRS cases, so there’s no unintentional overlap.
·Collectors are bound by the federal Fair Debt Collection Act and can be sued by consumers if they don’t abide by the rules protecting consumer privacy. They will also be subjected to government regulations regarding customer service.
·Last week, Senator Byron Dorgan (D-ND) introduced a bill that would “suspend immediately and indefinitely” IRS plans to hire private companies to collect delinquent tax debts and bar the use of any federally appropriated funds for such activity. (Don’t hold your breath. It’s not apt to happen…but it might – if you let your legislator know you want him or her to support this bill.)
Things affecting you personally:
·You will know if you’re in the program.
·IRS will send you a letter letting you know which agency will be contacting you. So OPEN YOUR IRS MAIL!
·The collections agency will be sending you a letter before they make any other contact.
If you get a call from someone and you haven’t gotten the IRS letter, what should you do?
·Be aware! If there are IRS liens out there, in the public domain, with your name on them, you’re going to be bombarded with phonies pretending to be IRS collections agents. You’re about to be victimized.
·So, don’t give out any information about yourself or your assets.
·Get the person’s name, company name, city, state, and phone number.
·After hanging up, check with information or the Internet for that company’s phone number – to make sure that the phone number s/he gave you really belongs to one of the IRS-approved companies.
·Call the company and see if they really have someone by that name working for them.
·If they do, ask to be connected via the company’s phone system. Or have the company give you his/her phone number.
·Then call back and find out how to work out your debt.
A suggestion to IRS? That IRS get a list of phone numbers used by the collection agencies, and a list of the collectors involved, and post them online AND have them available to their 800-line staff in case someone calls in. There will be a lot of fraud out there. And just because many of these people have been dodging their tax obligations, and alimony and child support, some of them for decades, and some people might consider them the scum of the earth, doesn’t mean they should be defrauded of their money – AND still owe IRS the whole chunk.
To avoid all of this? Call IRS now and start working out a payment plan or offer in compromise. It will keep you out of the hands of collectors – and you can send away all those callers, legit or phony!
And remember, you can find answers to all kinds of questions about tax policy and all kinds of other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
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