IRS tax debt to be collected by third party agencies

If you currently owe back taxes to the IRS, now would be a good time to contact a tax professional to determine if you qualify for the IRS fresh start program. The IRS recently released information related to its decision to seek the assistance of four third-party collection firms to aid in the recovery of approximately $138 billion in tax debt. What this could mean for taxpayers who owe is the start of multiple phone calls, harassing letters, and less time to financially prepare for payment due to a faster collection technique.

The program’s likelihood of success is hampered by well-documented instances of harassment by third-party agencies. Collection agencies are subject to the Fair Debt Collection Practices Act (FDCPA), which protects consumers from abusive debt collection practices. However, collectors often ignore these rules due to the pressure to produce a certain level of income and/or earn bonuses on top of the regular pay. This could prove toxic due to potential harassment lawsuits that could cost the IRS millions.

Also, this is not the first time the IRS has implemented such a program. According to the New York Times, “Twice before, in 1996 and 2006, the IRS has tried to outsource some of its collection functions. Both times, the programs were shut down and deemed failures.” However, not before causing significant stress to millions of taxpayers. The most famous was the elderly couple who received more than 150 calls in less than a month.

The IRS currently offers resolution programs that may help taxpayers resolve outstanding tax liabilities without exposing themselves to harsh collection practices by third-party agencies. Ignoring the opportunity to protect yourself and possibly solve your tax problem for less than expected (offer in compromise), is the same as staying in a house that is on fire. No one in their right mind would do that… right?

The IRS Fresh Start Program provides the opportunity to resolve your tax debt in many different ways. Depending on your assets, you may be able to enter into an installment agreement (IA) that is conducive to your financial standing, or save money by paying a landlord amount through an offer in compromise (OIC). If you choose to investigate the resolution options listed above, be sure to take note of the following when choosing your tax professional:

1. The tax professional must be licensed as an enrolled agent, certified public accountant, or attorney.

2. Check with the BBB for the rating

3. Consult or ask for testimonials from previous clients

Don’t ignore the time given to ensure your chance to resolve your tax debt problem without additional unwanted harassment. Contact your tax professional today.