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Senators accuse IRS's third party collectors of illegal, abusive tactics - II

In a post last week, our blog began examining how Congress, via a provision buried deep within the 2015 highway funding bill, called upon the Internal Revenue Service to once again start outsourcing some collection efforts to third party debt collectors

Specifically, we discussed how this initiative was recently re-launched, with the IRS contracting with four debt collectors -- ConServe, Performant Recovery, CBE Group and Pioneer Credit Recovery -- to collect past due payments on 140,000 accounts with balances of up to $50,000 in exchange for keeping up to 25 percent of any money collected.

In addition, we also touched on how a group of four U.S. senators -- Elizabeth Warren (D-MA), Jeff Merkley (D-OR), Sherrod Brown (D-OH) and Benjamin Cardin (D-MD) -- recently secured copies of the scripts used by the employees of these four debt collectors and were outraged by what they saw.

Specifically, their review of these scripts -- as well as one conducted by the New York Times -- revealed the following:

  • All four debt collectors inform consumers that they can establish installment plans lasting as long as seven years, which is actually two years longer than the amount of time outside collectors are permitted to offer under the tax code.
  • All four debt collectors encourage consumers who are perhaps unable to pay off their tax bill -- even via installment plans -- to make one-time voluntary payments, while three remind consumers that extra or higher payments can be accepted at any time.
  • Only one collector -- Performant -- instructs its employees to return so-called hardship cases (i.e., those involving people who make only enough to cover basic living expenses) to the IRS
  • One collector -- Pioneer -- suggests that consumers consider using everything from home loans and retirement savings to credit cards, and money from family or friends to pay back the tax debt.

For its part, the IRS has indicated that it finds the approaches being taken by the third party debt collectors acceptable and that it "is committed to running a balanced program that respects taxpayer rights while collecting the tax debts as intended under the law."

The aforementioned four senators, however, have taken a rather different view, being so incensed by what they saw -- illegal and abusive tactics -- that they penned a letter to the IRS, the Treasury Department and even Pioneer, which they accused of acting in "clear violation" of the tax code.

It will be interesting to see how big of an impact this letter and the accompanying pressure it creates on Capitol Hill will have on the IRS' third party debt collection efforts. Will the effort be abandoned for a third time -- just like in 1996 and 2006 -- over abuse and cost concerns?

Stay tuned for updates ...

Consider speaking with a skilled legal professional if you have endured unrelenting harassment from debt collectors and want to learn more about your rights and your options.

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