By A.J. Gross
The Internal Revenue Service will soon use private debt collectors to collect unpaid back taxes. This new tax collection provision was included in the new highway funding bill that passed in December. Included in the new law is the authorization for private debt collectors to make “robocalls” or “robotexts” to collect unpaid IRS taxes. The use of robocalls may make it easier for scammers.
The IRS always had the option to use third party private firms for tax debt collection. In fact, the IRS used third party private firms to collect back taxes from 1996 to 1997 and again from 2006 to 2009. Both times the program failed. The Taxpayer Advocate Service of the IRS determined that Internal Revenue agents were overall significantly more effective on collecting back tax debt compared to the use of third party private firms.
The new law passed in December makes it mandatory for the IRS to use third party private firms when the IRS’ efforts to collect back taxes have failed. This new law is likely in response to budget cuts which resulted in a reduction of IRS collection enforcement staff by 20% since 2010.
A potential major downside of private debt collectors is the use of robocalls and robotexts. A robocall is an automated telephone call that delivers a recorded message. A robotext is an automated text message. According to the Better Business Bureau (BBB) list of top ten scams of 2015, tax scams ranks #1 on the list at 24%. The second highest scam on the list, debt collection scams, is 8.3%. This means tax scams are nearly three times higher compared to debt collection scams. In fact, tax scams were ranked higher than the next three categories combined. Private debt collectors using robocalls may further increase tax scams. This is because tax scammers currently use robocalls to scam unsuspecting individuals. If the private debt collectors start using robocalls for tax collections, then how can anyone distinguish actual tax collection calls from fake tax collection calls?
Protect yourself from tax scams by following these four tips. One, taxpayers that owe taxes will receive a letter notifying them of outstanding taxes owed before the taxpayer receives a call. If you didn’t get a letter or you were not aware of any taxes owed, then the phone call is likely a scam. Two, the IRS will never send you an email. Three, the IRS is unable to accept payments on the phone. Four, call the IRS at 800-829-1040 if you unsure if the call you received is real or a scam.
A.J. Gross, C.P.A., E.A. is President of ALG Tax Solutions. A.J. Gross can be contacted at AJGross@
This article was printed in the February 7, 2016 - February 20, 2016 edition.