IRS starting private debt collection program this week

The IRS said Tuesday that it is beginning its private debt collection program this week.

The program is being started as a result of a law that Congress passed in 2015. Typically, taxpayers whose accounts will be given to private collectors are people whom the IRS has contacted multiple times in the past several years and still have unpaid taxes, IRS officials said.

The agency this week will start sending letters to a few hundred people informing them that their accounts are being transferred to private debt collection agencies. The program will grow over time, and the IRS expects to send several thousand letters a week by the end of the summer, said Mary Beth Murphy, commissioner of the IRS’s small-business and self-employed division.

{mosads}After the IRS sends a taxpayer a letter, the private firm assigned to the case will follow up with its own letter. Representatives of the private firms can identify themselves as IRS contractors but have to respect taxpayer rights. Any payments that taxpayers make will be made directly to the IRS, not to the private debt collector, IRS officials said.

The IRS has chosen four private companies to be involved in the program, and a taxpayer’s account will only be given to one of those companies.

In recent years, there have been a number of phone scams involving the impersonation of IRS agents. The IRS said that taxpayers should be on the lookout for scammers pretending to be private debt collectors and that they will only be contacted by legitimate firms if they have had an unpaid debt for years that the IRS has already contacted them about.

The IRS had private debt collection programs in the past that led to net losses for the federal government.

The National Treasury Employees Union (NTEU), which represents IRS employees, has been a strong opponent of private debt collection. Some Democratic lawmakers have also expressed concerns in the past.

“Every time this has been tried before, it has failed,” NTEU National President Tony Reardon said in a statement. “But once again Congress has forced this policy on the IRS, and we expect the results to be the same: collection agents getting paid to harass taxpayers, many of whom need assistance, not threats.”

Murphy said on a telephone call with reporters that the IRS has been working with NTEU, the National Taxpayer Advocate and the Treasury Inspector General for Tax Administration to make sure that the new debt collection program works well.

“We’re very hopeful that this is going to be successful,” she said.