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March 23, 2016


Using private industry to collect tax debt: When will the new program start?

It’s been a few months now since Congress passed a bill to require the IRS to use private debt collectors in certain cases.

The National Taxpayer Advocate and other critics contended that the bill was not a good idea because two previous efforts to use private industry to collect tax debt had failed to raise revenue and put taxpayers at risk of abusive debt collect methods.

But the bill passed and the president signed it. How are implementation efforts going?

Last month, IRS Commissioner John Koskinen testified before the Senate Finance Committee about the IRS’s efforts to get the new program going. Commissioner Koskinen told the senators that the IRS was committed to setting up the program and getting it going quickly.

According to the timeline Koskinen outlined last month, collectors are to be selected for the program by the end of the fiscal year.
Earlier this month, Koskinen updated Sen. Chuck Grassley, the Finance Committee chair, about the IRS’s progress. The plan now is to obtain bids in July from companies in the private debt collection industry who seek to participate in the IRS program.

It may be another year before the program is actually operating. The target date that Koskinen gave Grassley is April 2017.

In short, it’ll still be awhile before private companies start going after tax debt. But it seems unlikely that concerns about the program during that time.

For example, one concern is that allowing private debt collectors to contact taxpayers will undercut the IRS’s position that the IRS does not initiate contact with taxpayers by email or phone. This could make it easier for scammers who impersonate IRS agents.