When most people hear the term debt collector, they invariably envision those companies attempting to collect money owed to purely private enterprises. In other words, the last thing they think of is government entities.
While this has long been the case, things changed back in 2015 thanks to a provision buried deep within the language of a $305 billion highway funding bill requiring the Internal Revenue Service to start outsourcing at least some of its collection efforts to third party debt collectors.
Specifically, Congress pushed for the provision after the nonpartisan congressional Joint Committee on Taxation estimated that outsourcing IRS collection efforts could net $2.4 billion over the course of a decade, a not insubstantial dent in the roughly $138 billion owed to the agency.
This push to subcontract collection of federal tax debt came as a surprise to many, however, given that the approach was previously attempted -- and ultimately abandoned -- in both 1996 and 2006 due to concerns over abuse and cost.
Indeed, the IRS pulled the plug on the 2006 effort after just three years, calling it a failure and indicating that internal staff was better equipped to handle collections.
Despite this less than stellar track record, the move to outsource tax collection efforts was recently re-launched with the IRS contracting with four debt collectors -- ConServe, Performant Recovery, CBE Group and Pioneer.
Specifically, these four firms were tasked with attempting to collect past due payments on 140,000 accounts with balances of up to $50,000. In exchange, they retain up to 25 percent of the money collected.
In a rather shocking turn of events, however, a group of senators recently secured copies of the scripts being used by employees of these four debt collectors and were so incensed by what they saw -- illegal and abusive tactics -- that they penned a letter to the IRS, the Treasury Department and one firm they accused of acting in "clear violation" of the tax code.
We'll discuss these illegal and abusive tactics in detail in our next post ...
If you have endured unrelenting harassment from debt collectors and would like to learn more about your rights and your options, consider speaking with a skilled legal professional.