IRS Private Collection Agencies Get Bum Review

IRS collections

In January 2017, the IRS decided to, once again, hire private collection agencies to handle delinquent taxpayer accounts.

(I wrote about this in my January 2017 blog The IRS is Handing Delinquent Taxpayers Over to Private Collection Agencies.) Now, here we are a year and a half later and the program has just been reviewed with pretty dismal results.

Targeting Those Who Can’t Pay

According to what National Taxpayer Advocate Nina Olson discovered upon the review, “43 percent of the taxpayers put into payment plans by private collection agents, had income lower than their allowable living expenses.”

It seems those who have the least are the most willing to pay their IRS debts, since those are the folks the private collection agents appear to target. Why do they always go for the underdogs? I think it’s because they don’t fight back. They don’t have the resources to resist the harassment.

According to the same article cited above, the returns of 4,100 taxpayers whose debts were assigned to private collection agencies were reviewed by the Taxpayer Advocacy Service. Here’s what they found, “The data indicated that 28 percent had incomes below $20,000; 19 percent had incomes below the federal poverty level; and 44 percent had incomes below 250 percent of the federal poverty level.”

It has also been reported that Ms. Olson, “has long criticized the private debt collection program, which has drawn complaints for harassing taxpayers.”

Expensive And Inefficient

I suppose you never know how something is going to work until you try it. It will be interesting to see how long the IRS sticks with this program of trying to squeeze blood out of rocks. It isn’t as if the program is actually making any money, in fact it’s costing the IRS. According to, “In 2016, before the private debt collection program was revived, the IRS’s internal debt collection processes using IRS employees generated $4.7 billion in tax revenue. Under the private debt collection program, most of those internal procedures are bypassed in favor of referral to the outside collection agencies, which are able to keep up to 25 percent of what is collected. However, the program is already costing the U.S. Treasury more money than it brings in,”

If You Owe The IRS Back Taxes

If you haven’t paid your taxes in a few years, that is considered a serious tax problem. Regardless of your income, even if you know you can’t pay, don’t wait for an aggressive collections agency to call. Call our offices. We thrive on tackling the toughest of tax problems. We protect and defend our clients from aggressive tax collection efforts like wage garnishment and tax levies, while developing and implementing their game plan for successful resolution. We work to resolve your back-tax issues and avoid future ones.

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