BE WARY OF PRIVATE TAX COLLECTORS
“scripts” that the collector may follow.
However, greed has a great effect
on debt collectors; the contracts
with the collectors gives them 25%
of the amount of tax collected. In the
last period private collection was
performed, the private tax collectors
made more money than the tax money
actually sent to the IRS.
As reported by the Los Angeles Times,
9
“For all its faults, the Internal Revenue
Service at least is expected to know the
value of a dollar. But its math skills —
and management savvy — have been
called into question by a recent internal
report finding that in setting up a
program allowing private bill collectors
to dun taxpayers for back taxes, it spent
$20 million in 2016 and 2017 to collect
only $6.7 million.
The report came from Nina E. Olson,
head of the agency’s Taxpayer
Advocacy Service. Olson found not
only that the IRS was paying the private
bill collectors commissions they didn’t
earn, but that it also allowed them to
go after money that’s exempt from
collection under the law.”
The report came from Nina E. Olson,
head of the agency’s Taxpayer
Advocate Service. Olson found not
only that the IRS was paying private
tax collectors commissions they didn’t
earn, but that it also allowed them to
go after money that’s exempt from
collection under the law.
The author has found no published
cases addressing abusive tax collection
by private collectors, but there are
many published cases arising from
violations in ordinary debt collection. I
wouldn’t be surprised to see litigation
popping up here and there regarding
tax collections, if not everywhere. 10
And don’t forget the Taxpayers’ Bill of
Rights, set forth in 26 U.S.C. § 7803(a)
(3). This statute contains a litany of
“rights,” including the “right to quality
service,” the “right to pay no more than
the correct amount of the tax,” and
other similar rights. Unfortunately, the
issues listed in the Taxpayers’ Bill of
Rights are vague and not really very
helpful.
the taxpayer to send the money to
them. Don’t send the money to an
address provided by the tax collector,
or pay anything over the phone with a
credit card; any payments made should
be directly to the IRS.
Why is this relevant to a bankruptcy
case?
Your delinquent tax clients will
appreciate your advice about these
non-bankruptcy problems. And, you
may spot some tax collection violations
that provide you an additional source of
income.
One piece of advice you can give ...
be wary of scam phone calls from fake
private tax collectors. These are certain
to start happening. Here is what the
IRS says:
“The IRS urges you to be on the lookout
for unexpected scam phone calls from
anyone claiming to be collecting on
behalf of the tax agency.
“This is particularly important in light
of continuing scams where callers
impersonate IRS agents and request
immediate payment.
“Even with private debt collection,
you shouldn’t receive unexpected
phone calls from the IRS demanding
payment. When people owe tax, the
IRS always sends several collection
notices through the mail before making
phone calls.”
The author received a call some time
ago from someone who claimed he
was calling from the IRS, and that I
must make an immediate payment on
my delinquent taxes 11 on the phone
with a credit card. He said, with an
alarming tone of voice, the IRS was
already driving to my house to arrest
me if I didn’t pay right now. I had a good
laugh, and he hung up.
1. 26 U.S.C. § 6306.
2. CBE, Waterloo, IA; ConServe,
Fairport, NY; Performant, Pleasanton
CA; Pioneer, Horseheads, NY
3. 15 U.S.C. § 1692. The authorizing
statutes provide for over-riding the
FDCPA applicability limitations to
consumer debts.
4. 26 U.S.C. § 6304.
5. 15 U.S.C. § 1692(k), 26 U.S.C. §
6304(c), 26 U.S.C. § 7433.
6. But keep in mind that any prepetition
cause of action for damages is property
of the debtor’s estate and, technically,
only the trustee is authorized to pursue
it, unless released to the debtor.
7. The subject of administrative
remedies is fully addressed in King’s
Discharging Taxes in Consumer
Bankruptcy Cases, at ¶ 5.16. Published
by The Morgan King Company.
8. 26 U.S.C. § 7433A(b)(1), (4). See
also26 U.S.C. § 6306(f).
9. Jan. 16, 2018.
10. To make a complaint about a
private collection agency or report
misconduct by its employee, call the
TIGTA (“Treasury Inspector General
for Tax Administration “) hotline at 800-
366-4484 or visit www.tigta.gov.
11. In fact, I didn’t owe any delinquent
taxes. That was made up, as well.
More advice for the client; the most
important red flag is the caller asking
National Association of Consumer Bankruptcy Attorneys
Spring 2018
CONSUMER BANKRUPTCY JOURNAL
13