The tax man and the debt collector team up
http://moneycentral.msn.com/content/Tax ... P97020.asp
The IRS has found a perfect partner: the debt collection industry, filled with cowboys who lie, harass and abuse their targets. They could be coming after you.
By Liz Pulliam Weston
The federal government could pay for the entire war in Iraq -- and have more than $100 billion to spare -- if only the IRS could collect all the back taxes that are currently owed.
But the agency doesn’t currently have the staff to fully pursue the debt that’s considered collectible, which the IRS estimates constitutes up to $112 billion of the total $280 billion owed.
So Congress, at President Bush’s urging, has given the IRS the ability to hire private debt collectors as part of the American Jobs Creation Act of 2004. The collectors will get to keep up to 25% of any tax debt they manage to reap. The program is expected to kick off in early 2006.
If all this doesn’t give you the chills, then perhaps you don’t know enough about the state of the debt collection industry today.
Industry rife with problems
It’s a Wild West kind of world, with some law-abiding companies and a whole host of cowboys that don’t care what laws are broken as long as they get their money. Looking for a loan?
Check out MSN Money's
Loan Center
And it’s not just deadbeats who get victimized. Collectors increasingly are targeting innocent consumers, trying to browbeat them into paying debts they don’t owe. (See "Sleazy new debt-collection tacticsâ€
The IRS Teams Up With Debt Collectors
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David A. Szwak
- Posts: 1974
- Joined: Thu Jul 13, 2006 11:19 pm
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David A. Szwak
- Posts: 1974
- Joined: Thu Jul 13, 2006 11:19 pm
Taxpayer advocate to IRS: Protect taxpayer data
http://money.cnn.com/2006/07/14/pf/taxe ... /index.htm
In a report to lawmakers, Nina Olson urges ban on tax preparer use of client data for non-tax purposes and limited use of private debt collectors.
By Jeanne Sahadi, CNNMoney.com senior writer
July 14 2006: 11:27 AM EDT
NEW YORK (CNNMoney.com) -- If taxpayer advocate Nina Olson has her way, lawmakers and the IRS will implement measures that better protect confidential taxpayer information, limit the use of private debt collection agencies and repeal a new provision that requires partial payment up-front from taxpayers least able to pay back taxes.
Those are three areas Olson plans to emphasize in the coming year, according to a report to Congress delivered this week.
Better protection of taxpayer data: Under current regulations - and under proposed changes to those regulations - tax preparers, with a client's consent, may use, share or sell that client's tax information for non-tax purposes. And once the information gets into third-party hands, there is no restriction on how it may be used.
While Olson commends the IRS for coming up with proposed regulations that provide more protection for taxpayers overall than the current ones do, she would like the new regulations to prohibit tax preparers from using client information for anything other than tax-related purposes.
"More and more tax preparation businesses view tax preparation merely as a hook to get customers in the door so they can sell them other, more lucrative products," Olson wrote. "As a result taxpayers with limited financial sophistication often end up paying high fees for products that are not suitable for them."
Those products run that gamut from the notoriously high-cost refund anticipation loans, to IRAs and mortgage refinancings, none of which Olson considers "tax-related."
Repeal down payment provision in offers in compromise: When a taxpayer is unable to pay his tax bill, he may strike a deal with the IRS called an offer in compromise. A new provision requires taxpayers who submit an offer in compromise to put down 20 percent of the total amount they agree to pay.
Olson notes that taxpayers in such a situation are unlikely to have enough funds to cover the 20 percent, and likely would have to gather them from costly loans, gifts or assets that the IRS would not otherwise be able to touch.
"The legislation will encourage taxpayers to submit low-ball offers, which would require a lower down payment," she writes.
She is concerned that the new provision will reduce the money the IRS collects both because of lower offers made coupled with a greater likelihood that the IRS would reject them because they're too low.
Limit use of private debt collectors: The authority to use private debt collectors on cases of back taxes owed was given to the IRS by Congress in 2004.
Olson has criticized the measure for, among other things, its costs and its potential to incentivize private agencies to harass taxpayers since their compensation will be based on a percentage of total money collected.
In her report, she raises particular concern about the use of private debt collectors in cases where taxpayers are already having some of their income garnished by the IRS under an automated levy system, especially the elderly living on Social Security.
When such a case is brought to the Taxpayer Advocate Service, Olson notes in her report, the Service intervenes, often resulting in the IRS granting the elderly taxpayer full relief.
She has called on the IRS to make procedural and policy changes to ensure that a private debt collector will never be assigned to a case in which the IRS is already collecting levies since it can be a costly duplication of efforts and it can create unnecessary hardships for the taxpayer.
http://money.cnn.com/2006/07/14/pf/taxe ... /index.htm
In a report to lawmakers, Nina Olson urges ban on tax preparer use of client data for non-tax purposes and limited use of private debt collectors.
By Jeanne Sahadi, CNNMoney.com senior writer
July 14 2006: 11:27 AM EDT
NEW YORK (CNNMoney.com) -- If taxpayer advocate Nina Olson has her way, lawmakers and the IRS will implement measures that better protect confidential taxpayer information, limit the use of private debt collection agencies and repeal a new provision that requires partial payment up-front from taxpayers least able to pay back taxes.
Those are three areas Olson plans to emphasize in the coming year, according to a report to Congress delivered this week.
Better protection of taxpayer data: Under current regulations - and under proposed changes to those regulations - tax preparers, with a client's consent, may use, share or sell that client's tax information for non-tax purposes. And once the information gets into third-party hands, there is no restriction on how it may be used.
While Olson commends the IRS for coming up with proposed regulations that provide more protection for taxpayers overall than the current ones do, she would like the new regulations to prohibit tax preparers from using client information for anything other than tax-related purposes.
"More and more tax preparation businesses view tax preparation merely as a hook to get customers in the door so they can sell them other, more lucrative products," Olson wrote. "As a result taxpayers with limited financial sophistication often end up paying high fees for products that are not suitable for them."
Those products run that gamut from the notoriously high-cost refund anticipation loans, to IRAs and mortgage refinancings, none of which Olson considers "tax-related."
Repeal down payment provision in offers in compromise: When a taxpayer is unable to pay his tax bill, he may strike a deal with the IRS called an offer in compromise. A new provision requires taxpayers who submit an offer in compromise to put down 20 percent of the total amount they agree to pay.
Olson notes that taxpayers in such a situation are unlikely to have enough funds to cover the 20 percent, and likely would have to gather them from costly loans, gifts or assets that the IRS would not otherwise be able to touch.
"The legislation will encourage taxpayers to submit low-ball offers, which would require a lower down payment," she writes.
She is concerned that the new provision will reduce the money the IRS collects both because of lower offers made coupled with a greater likelihood that the IRS would reject them because they're too low.
Limit use of private debt collectors: The authority to use private debt collectors on cases of back taxes owed was given to the IRS by Congress in 2004.
Olson has criticized the measure for, among other things, its costs and its potential to incentivize private agencies to harass taxpayers since their compensation will be based on a percentage of total money collected.
In her report, she raises particular concern about the use of private debt collectors in cases where taxpayers are already having some of their income garnished by the IRS under an automated levy system, especially the elderly living on Social Security.
When such a case is brought to the Taxpayer Advocate Service, Olson notes in her report, the Service intervenes, often resulting in the IRS granting the elderly taxpayer full relief.
She has called on the IRS to make procedural and policy changes to ensure that a private debt collector will never be assigned to a case in which the IRS is already collecting levies since it can be a costly duplication of efforts and it can create unnecessary hardships for the taxpayer.
-
David A. Szwak
- Posts: 1974
- Joined: Thu Jul 13, 2006 11:19 pm
Friday, March 10, 2006
http://dontmesswithtaxes.typepad.com/do ... bt_co.html
IRS and debt collectors, a partnership made in …
Do you want your friends, neighbors and family to know you're a tax deadbeat? Some fear that such disclosures could soon happen, now that three private firms have been awarded federal contracts to collect tax debts.
Yes, the IRS has joined the outsourcing ranks.
The debt collector deals were announced Thursday afternoon. The new IRS contractors are the CBE Group Inc. of Waterloo, Iowa; Pioneer Credit Recovery, Inc. of Arcade, N.Y.; and, from right here in Austin, the heart of Texas, my new hometown, comes Linebarger Goggan Blair & Sampson, LLP.
In making the announcement, IRS Commissioner Mark Everson specifically mentions the "concerns expressed about this project, which involves work traditionally done by the government. As a result, we are putting tough safeguards in place to protect taxpayer rights and privacy. We will be closely monitoring contractor performance to make sure they're following the law as well as our own internal standards."
Given the feds' reputation in general (the old joke about the oxymoronic "I'm from the government and I'm here to help you" unfortunately got a whole new life following Katrina) and the lack of esteem most have for the IRS in particular, Everson's pledge to make sure the private firms meet agency standards isn't much of a confidence builder.
Combine that with the horror stories about debt collectors and it's easy to understand why some people think this might be the Worst. Idea. Ever.
But, as is so often the case, money talked.
In seeking the authority to assign some tax bills to private collectors, the IRS argued that such outsourcing would involve primarily uncontested tax debts and it would free up agency employees to more aggressively pursue more egregious, and richer, violators. Congress and president agreed, and this pilot program was included in the American Jobs Creation Act of 2004.
The collection program will be expanded over 10 years; the next phase is in 2008, when up to 10 firms will be added. When all is said and done, the IRS expects private debt collectors will bring the U.S. Treasury an additional $1.4 billion in outstanding taxes. That's just a drop in the tax gap (blogged here) bucket, but I guess you gotta start somewhere.
Of course, as part of the private sector, these debt collectors do have their price. In exchange for the money they bring in, the firms reportedly will get a commission (program supporter words) or bounty (opponents' description) of up to 25 percent based of the money they collect.
In addition to the expected consumer and privacy protection groups expressing trepidation about this new tax debt collection direction, some federal workers themselves are also unhappy. The most vocal is the National Treasury Employees Union, which counts 90,000 IRS employees among its membership.
NTEU President Colleen M. Kelley called the announcement "a sad day for America's taxpayers," in that "American taxpayers can no longer have the confidence that federal tax collections are not based on personal gain."
And the union naturally is worried that such diversion of traditional IRS duties to outside companies could lead to permanent job losses within the federal agency. The NTEU already is fighting with the IRS over the closure of customer call sites in Chicago and Houston. You can read about that battle in this NTEU release.
Hmmm. Kinda makes you wonder if in between nuclear energy talks in India, the president might have also mentioned that the Asian nation start thinking about where it would like to locate an IRS call center.
TODAY'S TAX TIP: If you don't want to face a debt collector as well as the IRS, you need to figure out how to pay any tax bill you owe. You do have some options. They may not be the options you really want, but they're better than the added penalties, interest and potential hassling of a bill collector.
You can pay by credit card. Of course, if you don't pay off your plastic, you could get a separate visit from the debt collector. Or you can investigate the IRS' installment payment plan. Or, if all else fails, try to work out a smaller payment deal via the agency's Offer in Compromise program.
You can find details on these potential payment methods here.
Addendum March 14: It's Carnival time! Both the the latest Carnival of Debt Reduction and the 39th edition of the Carnival of Personal Finance included this post in their compilations of the week's noteworthy financial stories. Check out both Carnivals for more on how to make the most of your money.
Friday, March 10, 2006
http://dontmesswithtaxes.typepad.com/do ... bt_co.html
IRS and debt collectors, a partnership made in …
Do you want your friends, neighbors and family to know you're a tax deadbeat? Some fear that such disclosures could soon happen, now that three private firms have been awarded federal contracts to collect tax debts.
Yes, the IRS has joined the outsourcing ranks.
The debt collector deals were announced Thursday afternoon. The new IRS contractors are the CBE Group Inc. of Waterloo, Iowa; Pioneer Credit Recovery, Inc. of Arcade, N.Y.; and, from right here in Austin, the heart of Texas, my new hometown, comes Linebarger Goggan Blair & Sampson, LLP.
In making the announcement, IRS Commissioner Mark Everson specifically mentions the "concerns expressed about this project, which involves work traditionally done by the government. As a result, we are putting tough safeguards in place to protect taxpayer rights and privacy. We will be closely monitoring contractor performance to make sure they're following the law as well as our own internal standards."
Given the feds' reputation in general (the old joke about the oxymoronic "I'm from the government and I'm here to help you" unfortunately got a whole new life following Katrina) and the lack of esteem most have for the IRS in particular, Everson's pledge to make sure the private firms meet agency standards isn't much of a confidence builder.
Combine that with the horror stories about debt collectors and it's easy to understand why some people think this might be the Worst. Idea. Ever.
But, as is so often the case, money talked.
In seeking the authority to assign some tax bills to private collectors, the IRS argued that such outsourcing would involve primarily uncontested tax debts and it would free up agency employees to more aggressively pursue more egregious, and richer, violators. Congress and president agreed, and this pilot program was included in the American Jobs Creation Act of 2004.
The collection program will be expanded over 10 years; the next phase is in 2008, when up to 10 firms will be added. When all is said and done, the IRS expects private debt collectors will bring the U.S. Treasury an additional $1.4 billion in outstanding taxes. That's just a drop in the tax gap (blogged here) bucket, but I guess you gotta start somewhere.
Of course, as part of the private sector, these debt collectors do have their price. In exchange for the money they bring in, the firms reportedly will get a commission (program supporter words) or bounty (opponents' description) of up to 25 percent based of the money they collect.
In addition to the expected consumer and privacy protection groups expressing trepidation about this new tax debt collection direction, some federal workers themselves are also unhappy. The most vocal is the National Treasury Employees Union, which counts 90,000 IRS employees among its membership.
NTEU President Colleen M. Kelley called the announcement "a sad day for America's taxpayers," in that "American taxpayers can no longer have the confidence that federal tax collections are not based on personal gain."
And the union naturally is worried that such diversion of traditional IRS duties to outside companies could lead to permanent job losses within the federal agency. The NTEU already is fighting with the IRS over the closure of customer call sites in Chicago and Houston. You can read about that battle in this NTEU release.
Hmmm. Kinda makes you wonder if in between nuclear energy talks in India, the president might have also mentioned that the Asian nation start thinking about where it would like to locate an IRS call center.
TODAY'S TAX TIP: If you don't want to face a debt collector as well as the IRS, you need to figure out how to pay any tax bill you owe. You do have some options. They may not be the options you really want, but they're better than the added penalties, interest and potential hassling of a bill collector.
You can pay by credit card. Of course, if you don't pay off your plastic, you could get a separate visit from the debt collector. Or you can investigate the IRS' installment payment plan. Or, if all else fails, try to work out a smaller payment deal via the agency's Offer in Compromise program.
You can find details on these potential payment methods here.
Addendum March 14: It's Carnival time! Both the the latest Carnival of Debt Reduction and the 39th edition of the Carnival of Personal Finance included this post in their compilations of the week's noteworthy financial stories. Check out both Carnivals for more on how to make the most of your money.
Friday, March 10, 2006
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David A. Szwak
- Posts: 1974
- Joined: Thu Jul 13, 2006 11:19 pm
IRS Outsourcing Debt Collection
http://www.argmax.com/mt_blog/archive/000627.php
Posted by John Irons at March 10, 2006 01:38 PM
This seems like it could have the potential for a very bad outcome... (Anyone want to take bets for when taxpayer information is first misused?).
The argument for doing this is that it might be cheaper to collect unpaid taxes through a private company. But since the IRS will have to do quite a bit of oversight - it seems like there would be a lot of wasted resources dealing with all the issues that might arise. (E.g. what's to prevent these companies from targeting specific groups?)
This seems like a core function of the IRS, and it should be done in-house, not farmed out.
Chron.com | IRS Awards First Debt Collection Contracts By MARY DALRYMPLE AP Tax Writer � 2006 The Associated Press
WASHINGTON â€â€
http://www.argmax.com/mt_blog/archive/000627.php
Posted by John Irons at March 10, 2006 01:38 PM
This seems like it could have the potential for a very bad outcome... (Anyone want to take bets for when taxpayer information is first misused?).
The argument for doing this is that it might be cheaper to collect unpaid taxes through a private company. But since the IRS will have to do quite a bit of oversight - it seems like there would be a lot of wasted resources dealing with all the issues that might arise. (E.g. what's to prevent these companies from targeting specific groups?)
This seems like a core function of the IRS, and it should be done in-house, not farmed out.
Chron.com | IRS Awards First Debt Collection Contracts By MARY DALRYMPLE AP Tax Writer � 2006 The Associated Press
WASHINGTON â€â€
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David A. Szwak
- Posts: 1974
- Joined: Thu Jul 13, 2006 11:19 pm
http://www.consumerlaw.org/initiatives/ ... 003_CW.pdf
Page 1
Testimony before the WAYS AND MEANS COMMITTEE SUBCOMMITTEE ON OVERSIGHT regarding “Use of Private Collection Agencies to Improve IRS Debt Collectionâ€
Page 1
Testimony before the WAYS AND MEANS COMMITTEE SUBCOMMITTEE ON OVERSIGHT regarding “Use of Private Collection Agencies to Improve IRS Debt Collectionâ€
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David A. Szwak
- Posts: 1974
- Joined: Thu Jul 13, 2006 11:19 pm
Tag: collector
Debt collection defenses
skbell1.statesmanblogs.com/tag.aspx?q=collector
An Austin law firm looking to track tax deadbeats for government agencies has been smacked down a second time, this time in its own backyard.
Travis County executives this week tabled a proposal by Linebarger Goggan Blair & Sampson to collect delinquent tax bills from county residents even after a representative of the firm essentially offered a money-back guarantee on the service.
According to the Austin American-Statesman, Linebarger spokesman Ken Oden said his firm would forfeit "every nickel we make" if it couldn't collect as well as the county has.
Ah, yes. Money. That's the driving force behind outsourcing the collection of delinquent tax bills. Many state and local tax departments nationwide farm out this unsavory task. Uncle Sam wants to follow suit.
In fact, Linebarger was one of three firms that in March was awarded an IRS contract to collect federal tax debts. You can read about that announcement, and my misgivings about the process, here.
But things have not gone well for the IRS's outsourcing plan since then.
Just weeks after awarding the potentially lucrative federal tax contracts (the collection agencies will get to keep up to 24 percent of the amounts they collect), the IRS told the companies to stop (details here). Some of the firms that didn't get in on this initial phase of private tax debt collecting said they were passed over because of contracting irregularities and the goverment has put the plan on hold pending further investigation.
Apparently, the IRS inquiry is not the first time that the Linebarger group has been involved in an official investigation.
USAToday reported here that the Austin firm previously "has been tangled in legal controversy, including a bribery scheme involving a collection contract in Texas and a federal investigation of another collection deal in Louisiana."
Those allegations didn't come up at this week's Travis County meeting. The commissioners, according to the American-Statesman story, were primarily concerned with whether Linebarger could collect as much in unpaid taxes as county employees already do. Travis reportedly is the only urban county in Texas that collects its own delinquent taxes and is reputed to be the best in the state at doing so.
Oden, however, argued that his firm could match the money collection. He also questioned whether Travis County's tax collection system unintentionally punishes low-income minority residents with too many collection lawsuits, a contention that local minority leaders and organizations have recently echoed.
Both sides point to stats they say support the fairness or unfairness of Travis's current collection methods. Regardless, countered the county's tax assessor-collector, switching to a private firm would not resolve any concerns.
And such concern about ethical and equitable collection, folks, is the biggest problem facing private collection of tax debt at any level of government.
Dastardly debt collectors: Let's face it, debt collectors have an awful reputation. You can argue that they have to play hardball because deadbeats have been jobbing the credit system for too long. The money these losers refuse to pay costs us all in increased fees, higher interest rates and, when it comes to upaid government levies, more taxes.
Yes, greed also is a factor behind increased consumer costs. And yes, credit card and other loan companies use these unpaid accounts as an excuse to do what they really want to do, which is charge us more. But it does have to cost them something. Plus, delinquent accounts provide them easy cover.
But there's just as much evidence that collection agencies abuse both the system and those who, in many cases, face legitimate financial struggles. Have you ever been out of a job, out of savings and had to make hard choices about which bills to pay and which ones to let slide? If it's between the electic bill or the Visa card, I know which one I'd pay.
Many years ago, I had a run-in with a collection agency. Thankfully, it was all by correspondence rather than harassing phone calls or visits, and it was a mistake.
It seems that the billing manager at my doctor's office turned over all accounts that were two months overdue. That included mine, still unpaid because my insurance company was inordinately slow in processing my claim. (Medical insurance hassles are a whole 'nother pain-in-the-butt financial issue I'll look at later.)
Anyway, I freaked out when I opened that letter. I pay my bills. I've always paid my bills. Thankfully, I've always been able to pay my bills.
Then I got mad.
I called the collection agency and ranted at a couple of folks there (turn about is fair play). They sicced me on the doctor's office, and I did the same there.
Apparently many of the doctor's patients were in the same situation as I and had already done the same. By the time I called, the office manager had the apology/explanation speech down pat. The collection process was stopped, my health insurer eventually paid up and all was again right in the world.
But that, it seems, is not the usual way this process goes. Despite federal legislation to protect consumers against abusive debt collectors, the Federal Trade Commission regularly receives tens of thousands complaints about overzealous and unscrupulous collection agents.
If you find yourself facing a debt collector, even one that's not (yet) harrassing you, know what your rights are and what the collectors legal limits are.
Check out the Complaints continue section of this related blog for information on the Fair Debt Colleciton Fair Debt Collection Practices Act (FDCPA). This law was enacted in 1977 in response to, and I quote the legislative language itself, "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy."
You'll also find out where you can get more information about your rights in these cases. Here's hoping you never have to utilize these federal protections. But, as I found out, sometimes mistakes do happen.
So make sure you're prepared..
Posted 5.18.2006 9:10:13 PM
Debt collection defenses
skbell1.statesmanblogs.com/tag.aspx?q=collector
An Austin law firm looking to track tax deadbeats for government agencies has been smacked down a second time, this time in its own backyard.
Travis County executives this week tabled a proposal by Linebarger Goggan Blair & Sampson to collect delinquent tax bills from county residents even after a representative of the firm essentially offered a money-back guarantee on the service.
According to the Austin American-Statesman, Linebarger spokesman Ken Oden said his firm would forfeit "every nickel we make" if it couldn't collect as well as the county has.
Ah, yes. Money. That's the driving force behind outsourcing the collection of delinquent tax bills. Many state and local tax departments nationwide farm out this unsavory task. Uncle Sam wants to follow suit.
In fact, Linebarger was one of three firms that in March was awarded an IRS contract to collect federal tax debts. You can read about that announcement, and my misgivings about the process, here.
But things have not gone well for the IRS's outsourcing plan since then.
Just weeks after awarding the potentially lucrative federal tax contracts (the collection agencies will get to keep up to 24 percent of the amounts they collect), the IRS told the companies to stop (details here). Some of the firms that didn't get in on this initial phase of private tax debt collecting said they were passed over because of contracting irregularities and the goverment has put the plan on hold pending further investigation.
Apparently, the IRS inquiry is not the first time that the Linebarger group has been involved in an official investigation.
USAToday reported here that the Austin firm previously "has been tangled in legal controversy, including a bribery scheme involving a collection contract in Texas and a federal investigation of another collection deal in Louisiana."
Those allegations didn't come up at this week's Travis County meeting. The commissioners, according to the American-Statesman story, were primarily concerned with whether Linebarger could collect as much in unpaid taxes as county employees already do. Travis reportedly is the only urban county in Texas that collects its own delinquent taxes and is reputed to be the best in the state at doing so.
Oden, however, argued that his firm could match the money collection. He also questioned whether Travis County's tax collection system unintentionally punishes low-income minority residents with too many collection lawsuits, a contention that local minority leaders and organizations have recently echoed.
Both sides point to stats they say support the fairness or unfairness of Travis's current collection methods. Regardless, countered the county's tax assessor-collector, switching to a private firm would not resolve any concerns.
And such concern about ethical and equitable collection, folks, is the biggest problem facing private collection of tax debt at any level of government.
Dastardly debt collectors: Let's face it, debt collectors have an awful reputation. You can argue that they have to play hardball because deadbeats have been jobbing the credit system for too long. The money these losers refuse to pay costs us all in increased fees, higher interest rates and, when it comes to upaid government levies, more taxes.
Yes, greed also is a factor behind increased consumer costs. And yes, credit card and other loan companies use these unpaid accounts as an excuse to do what they really want to do, which is charge us more. But it does have to cost them something. Plus, delinquent accounts provide them easy cover.
But there's just as much evidence that collection agencies abuse both the system and those who, in many cases, face legitimate financial struggles. Have you ever been out of a job, out of savings and had to make hard choices about which bills to pay and which ones to let slide? If it's between the electic bill or the Visa card, I know which one I'd pay.
Many years ago, I had a run-in with a collection agency. Thankfully, it was all by correspondence rather than harassing phone calls or visits, and it was a mistake.
It seems that the billing manager at my doctor's office turned over all accounts that were two months overdue. That included mine, still unpaid because my insurance company was inordinately slow in processing my claim. (Medical insurance hassles are a whole 'nother pain-in-the-butt financial issue I'll look at later.)
Anyway, I freaked out when I opened that letter. I pay my bills. I've always paid my bills. Thankfully, I've always been able to pay my bills.
Then I got mad.
I called the collection agency and ranted at a couple of folks there (turn about is fair play). They sicced me on the doctor's office, and I did the same there.
Apparently many of the doctor's patients were in the same situation as I and had already done the same. By the time I called, the office manager had the apology/explanation speech down pat. The collection process was stopped, my health insurer eventually paid up and all was again right in the world.
But that, it seems, is not the usual way this process goes. Despite federal legislation to protect consumers against abusive debt collectors, the Federal Trade Commission regularly receives tens of thousands complaints about overzealous and unscrupulous collection agents.
If you find yourself facing a debt collector, even one that's not (yet) harrassing you, know what your rights are and what the collectors legal limits are.
Check out the Complaints continue section of this related blog for information on the Fair Debt Colleciton Fair Debt Collection Practices Act (FDCPA). This law was enacted in 1977 in response to, and I quote the legislative language itself, "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy."
You'll also find out where you can get more information about your rights in these cases. Here's hoping you never have to utilize these federal protections. But, as I found out, sometimes mistakes do happen.
So make sure you're prepared..
Posted 5.18.2006 9:10:13 PM
Last edited by David A. Szwak on Thu Jul 27, 2006 8:57 pm, edited 1 time in total.
-
David A. Szwak
- Posts: 1974
- Joined: Thu Jul 13, 2006 11:19 pm
Tag: debt
From tax collectors to trash collectors
skbell1.statesmanblogs.com/tag.aspx?q=debt
Wow! Suddenly there's a rush of tax happenings. Tax and trash collectors, scofflaws racing against the tax man and Members of Congress just dying to change the estate taxes.
First, the Government Accountability Office has denied the protests filed against the IRS in connection with contracts it awarded in March to to three private debt collectors, one an Austin-based firm. This means the agency can immediately resume its controversial program to outsource overdue IRS bill collection.
That's as far as the effort will get though, as Congress included in the IRS appropriations bill a provision prohibiting, beginning Oct. 1, the agency from hiring any more private bill collectors.
Next comes yet another estate tax measure, introduced this week in the U.S. House. But prospects of what now has been scaled down to partial repeal still are iffy in this Congressional session.
Representatives previously had voted for full repeal. This new proposal follows a Senate compromise (that didn't come to a vote) calling for no tax on estates of $5 million ($10 million for married couples) or less. Estates between $5 million and $25 million would be taxed at the capital gains rate (currently 15 percent); those worth more than $25 million would be taxed at 30 percent.
The changes would take effect on Jan. 1, 2010, the day that the earlier estate tax law would have totally removed the tax for just that one year.
The bill also has a provision for a new 60 percent temporary deduction for qualified timber capital gains in an effort to persuade a handful of Senate Democrats who have long wanted the tree-cutting tax break to agree to the estate tax changes.
And that produces other problems. The timber provision adds another $5 billion to the estate tax modification costs. Joint Committee on Taxation number crunchers estimate the the total 10-year cost of the House estate-slash-timber (sorry, couldn't resist) bill will be $280 billion. That just might be too big of a budget pill for deficit watching members to swallow.
Then there's Gene Haas, owner of Oxnard, Calif.-based Haas Automation and NASCAR's Haas CNC Racing (Jeff Green's #66 Nextel Cup car and Johnny Sauter's #00 in the Busch series), who is speeding toward tax trouble. The Associated Press reports that Haas has been arrested for investigation of conspiracy, filing false tax returns and witness intimidation.
The U.S. Attorney's Office alleges that Haas orchestrated a plan to list $50 million in bogus expenses that could be written off as business costs and save the company $20 million in taxes. He's in jail in LA without bail.
And finally, Austin advertising copywriters who created and now manage the state's anti-littering campaign, are working to push the Texas Department of Transportation catch phrase to the top of Advertising Week's third annual favorite slogan contest.
Why do I care? The slogan is "Don't Mess with Texas."
Yep, the title of my little tax blog is related to refuse, which sorta fits since so many people trash talk or want to literally trash the tax code. Personally, as I explained in introducing Don't Mess With Taxes, I subscribe to the other interpretations of the "don't mess with" warning.
The slogan wasn't an immediate hit with state officials. The phrase's creator told the Austin American-Statesman that when he pitched it in 1985, one person asked that it be changed to "Please, don't mess with Texas."
I hope someone down at Congress Avenue and 11th Street pulled that faux Texan's residency card!
You can help the effort, even if you aren't a Texan but don't want to mess with us, by voting for "Don't Mess with Texas" at this Web page. Y'all do it for the sister tax site. Please.
P.S. -- I've added a poll to my main to my main Don't Mess With Taxes blog to find out whether readers are going to take all their vacation time, an issue touched on in Hot fun in the summertime. If you get a chance, click on over there and cast a vote.
And remember: If you're one of those who can't quite leave it all behind while on holiday, you can still check in anytime, anywhere, via any Internet connection to the ol' tax blog! Not that I'm recommending that. I'm just saying.
Posted 6.21.2006 11:58:06 PM
Tags: collectors, debt, estate, irs, litter, nascar, tax
Categories: News/Current events
Comments (0) | Permanent Link
Tax debt collectors are down and out
The U.S. House of Representatives decided to give the IRS a little more money, but lawmakers also put limits on how the tax agency could spend the funds.
Specifically, the appropriations bill prohibits the IRS from hiring any more private debt collectors.
The restriction would not alter the debt collection contracts -- including one to Austin-based Linebarger Goggan Blair & Sampson, LLP -- that the the IRS announced in March (details here). Those have been on hold pending an investigation of an allegedly improper contracting process (details here).
When the matter is resolved, if it is resolved in favor of the three companies the IRS picked to track down unpaid tax bills, those firms will get to work on about 10,000 overdue IRS accounts. The IRS had originally hoped as many as 75,000 tax deadbeat cases would be handled by the private agencies, but the implementation delay has forced the agency to scale back expectations.
The agency sought another $54 million for the coming fiscal year to keep the program going beyond this initial phase. IRS Commissioner Mark Everson admitted to Congress that it would be cheaper to hire more IRS agents to do the job, but said the federal budget process makes that difficult.
The hiring of more IRS employees shows up as a budget expenditure, Everson told a House Appropriations subcommittee in March. The budget doesn't acknowledge the extra money the added employees might collect. And their budgetary costs count against the IRS as it competes with other agencies for revenue while the federal deficit is increasing.
The House members weren't swayed. So when fiscal 2007 rolls around Oct. 1, the IRS will have to make do with the employees they have to get taxpayers to pay their bills. No cash can be allocated for continuation of the private collection agency plan.
Opponents of hiring private debt collectors, and you can count me as one of them, are delighted with the House's fiscal restrictions on private bill collectors.
But I'll admit that the $20.7 million extra that the Representatives agreed to add for IRS operations (bringing the total tax appropriation to $10.5 billion) probably isn't going to do a lot to help close the estimated $290 billion tax gap.
The funding measure is still $104.5 million short of the agency's original budget request, and Everson warned that it "would result in personnel reductions within the IRS."
Hmmm. Money woes leading to rank-and-file personnel cutbacks. I guess Washington, D.C., is finally starting to run the government like private business.
Like what you see here? Get even more tax news, tips, commentary and humor on Kay Bell's main blog Don’t Mess With Taxes.
Posted 6.15.2006 5:54:42 PM
Tags: collectors, debt, irs, tax
Categories: News/Current events
Comments (0) | Permanent Link
Debt collection defenses
An Austin law firm looking to track tax deadbeats for government agencies has been smacked down a second time, this time in its own backyard.
Travis County executives this week tabled a proposal by Linebarger Goggan Blair & Sampson to collect delinquent tax bills from county residents even after a representative of the firm essentially offered a money-back guarantee on the service.
According to the Austin American-Statesman, Linebarger spokesman Ken Oden said his firm would forfeit "every nickel we make" if it couldn't collect as well as the county has.
Ah, yes. Money. That's the driving force behind outsourcing the collection of delinquent tax bills. Many state and local tax departments nationwide farm out this unsavory task. Uncle Sam wants to follow suit.
In fact, Linebarger was one of three firms that in March was awarded an IRS contract to collect federal tax debts. You can read about that announcement, and my misgivings about the process, here.
But things have not gone well for the IRS's outsourcing plan since then.
Just weeks after awarding the potentially lucrative federal tax contracts (the collection agencies will get to keep up to 24 percent of the amounts they collect), the IRS told the companies to stop (details here). Some of the firms that didn't get in on this initial phase of private tax debt collecting said they were passed over because of contracting irregularities and the goverment has put the plan on hold pending further investigation.
Apparently, the IRS inquiry is not the first time that the Linebarger group has been involved in an official investigation.
USAToday reported here that the Austin firm previously "has been tangled in legal controversy, including a bribery scheme involving a collection contract in Texas and a federal investigation of another collection deal in Louisiana."
Those allegations didn't come up at this week's Travis County meeting. The commissioners, according to the American-Statesman story, were primarily concerned with whether Linebarger could collect as much in unpaid taxes as county employees already do. Travis reportedly is the only urban county in Texas that collects its own delinquent taxes and is reputed to be the best in the state at doing so.
Oden, however, argued that his firm could match the money collection. He also questioned whether Travis County's tax collection system unintentionally punishes low-income minority residents with too many collection lawsuits, a contention that local minority leaders and organizations have recently echoed.
Both sides point to stats they say support the fairness or unfairness of Travis's current collection methods. Regardless, countered the county's tax assessor-collector, switching to a private firm would not resolve any concerns.
And such concern about ethical and equitable collection, folks, is the biggest problem facing private collection of tax debt at any level of government.
Dastardly debt collectors: Let's face it, debt collectors have an awful reputation. You can argue that they have to play hardball because deadbeats have been jobbing the credit system for too long. The money these losers refuse to pay costs us all in increased fees, higher interest rates and, when it comes to upaid government levies, more taxes.
Yes, greed also is a factor behind increased consumer costs. And yes, credit card and other loan companies use these unpaid accounts as an excuse to do what they really want to do, which is charge us more. But it does have to cost them something. Plus, delinquent accounts provide them easy cover.
But there's just as much evidence that collection agencies abuse both the system and those who, in many cases, face legitimate financial struggles. Have you ever been out of a job, out of savings and had to make hard choices about which bills to pay and which ones to let slide? If it's between the electic bill or the Visa card, I know which one I'd pay.
Many years ago, I had a run-in with a collection agency. Thankfully, it was all by correspondence rather than harassing phone calls or visits, and it was a mistake.
It seems that the billing manager at my doctor's office turned over all accounts that were two months overdue. That included mine, still unpaid because my insurance company was inordinately slow in processing my claim. (Medical insurance hassles are a whole 'nother pain-in-the-butt financial issue I'll look at later.)
Anyway, I freaked out when I opened that letter. I pay my bills. I've always paid my bills. Thankfully, I've always been able to pay my bills.
Then I got mad.
I called the collection agency and ranted at a couple of folks there (turn about is fair play). They sicced me on the doctor's office, and I did the same there.
Apparently many of the doctor's patients were in the same situation as I and had already done the same. By the time I called, the office manager had the apology/explanation speech down pat. The collection process was stopped, my health insurer eventually paid up and all was again right in the world.
But that, it seems, is not the usual way this process goes. Despite federal legislation to protect consumers against abusive debt collectors, the Federal Trade Commission regularly receives tens of thousands complaints about overzealous and unscrupulous collection agents.
If you find yourself facing a debt collector, even one that's not (yet) harrassing you, know what your rights are and what the collectors legal limits are.
Check out the Complaints continue section of this related blog for information on the Fair Debt Colleciton Fair Debt Collection Practices Act (FDCPA). This law was enacted in 1977 in response to, and I quote the legislative language itself, "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy."
You'll also find out where you can get more information about your rights in these cases. Here's hoping you never have to utilize these federal protections. But, as I found out, sometimes mistakes do happen.
So make sure you're prepared.
Like what you see here? Get even more tax news, tips, commentary and humor on Kay Bell's main blog Don’t Mess With Taxes.
Posted 5.18.2006 9:10:13 PM
Tags: bill, collector, debt, taxes
Categories: Other, News/Current events
Comments (0) | Permanent Link
Private tax collection on hold
A couple of weeks ago the IRS awarded contracts to three private firms that would soon start collecting money that taxpayers owed the IRS.
That plan is now on hold.
The IRS has issued a stop-work order to the firms, which included, from right here in Austin, Linebarger Goggan Blair & Sampson, LLP. You can go here to read more about the contracts and why many, including yours truly, thinks such outsourcing is not such a good idea.
CCH, the publishing and tax software company, reports that the IRS put the brakes on the controversial collection plan after GC Services LP and Diversified Collection Services, Inc., filed protests with the Government Accountability Office, which handles contracting disputes involving any federal agency.
The complaining companies were among the 30 that did not make the initial cut in the contract process.
Private debt collectors, many of whom don't have, shall we say, the most savory of reputations when it comes to dealing with "customers," were slated to begin collecting on the IRS' behalf this summer. The IRS is hopeful that the timetable won't be pushed back too far.
According to CHH, the IRS responded the to companies' filings by saying "protests are not unusual in the procurement process." The agency also said it will continue to prepare for the use of private debt collectors until the protest is resolved and will "respond accordingly when (the) GAO issues its ruling."
Longer term,the IRS is looking to hire around seven more debt collection agencies by 2008 to go after what the IRS says will be "relatively simple cases" in which taxpayers have acknowledged that they owe Uncle Sam.
But for now, the IRS has until April 17, the same deadline most of us also face to get our returns at least en route to the agency, to provide the GAO with a report on its side of the matter. The GAO has until June 26 to issue its decision.
Posted 3.27.2006 4:13:41 PM
From tax collectors to trash collectors
skbell1.statesmanblogs.com/tag.aspx?q=debt
Wow! Suddenly there's a rush of tax happenings. Tax and trash collectors, scofflaws racing against the tax man and Members of Congress just dying to change the estate taxes.
First, the Government Accountability Office has denied the protests filed against the IRS in connection with contracts it awarded in March to to three private debt collectors, one an Austin-based firm. This means the agency can immediately resume its controversial program to outsource overdue IRS bill collection.
That's as far as the effort will get though, as Congress included in the IRS appropriations bill a provision prohibiting, beginning Oct. 1, the agency from hiring any more private bill collectors.
Next comes yet another estate tax measure, introduced this week in the U.S. House. But prospects of what now has been scaled down to partial repeal still are iffy in this Congressional session.
Representatives previously had voted for full repeal. This new proposal follows a Senate compromise (that didn't come to a vote) calling for no tax on estates of $5 million ($10 million for married couples) or less. Estates between $5 million and $25 million would be taxed at the capital gains rate (currently 15 percent); those worth more than $25 million would be taxed at 30 percent.
The changes would take effect on Jan. 1, 2010, the day that the earlier estate tax law would have totally removed the tax for just that one year.
The bill also has a provision for a new 60 percent temporary deduction for qualified timber capital gains in an effort to persuade a handful of Senate Democrats who have long wanted the tree-cutting tax break to agree to the estate tax changes.
And that produces other problems. The timber provision adds another $5 billion to the estate tax modification costs. Joint Committee on Taxation number crunchers estimate the the total 10-year cost of the House estate-slash-timber (sorry, couldn't resist) bill will be $280 billion. That just might be too big of a budget pill for deficit watching members to swallow.
Then there's Gene Haas, owner of Oxnard, Calif.-based Haas Automation and NASCAR's Haas CNC Racing (Jeff Green's #66 Nextel Cup car and Johnny Sauter's #00 in the Busch series), who is speeding toward tax trouble. The Associated Press reports that Haas has been arrested for investigation of conspiracy, filing false tax returns and witness intimidation.
The U.S. Attorney's Office alleges that Haas orchestrated a plan to list $50 million in bogus expenses that could be written off as business costs and save the company $20 million in taxes. He's in jail in LA without bail.
And finally, Austin advertising copywriters who created and now manage the state's anti-littering campaign, are working to push the Texas Department of Transportation catch phrase to the top of Advertising Week's third annual favorite slogan contest.
Why do I care? The slogan is "Don't Mess with Texas."
Yep, the title of my little tax blog is related to refuse, which sorta fits since so many people trash talk or want to literally trash the tax code. Personally, as I explained in introducing Don't Mess With Taxes, I subscribe to the other interpretations of the "don't mess with" warning.
The slogan wasn't an immediate hit with state officials. The phrase's creator told the Austin American-Statesman that when he pitched it in 1985, one person asked that it be changed to "Please, don't mess with Texas."
I hope someone down at Congress Avenue and 11th Street pulled that faux Texan's residency card!
You can help the effort, even if you aren't a Texan but don't want to mess with us, by voting for "Don't Mess with Texas" at this Web page. Y'all do it for the sister tax site. Please.
P.S. -- I've added a poll to my main to my main Don't Mess With Taxes blog to find out whether readers are going to take all their vacation time, an issue touched on in Hot fun in the summertime. If you get a chance, click on over there and cast a vote.
And remember: If you're one of those who can't quite leave it all behind while on holiday, you can still check in anytime, anywhere, via any Internet connection to the ol' tax blog! Not that I'm recommending that. I'm just saying.
Posted 6.21.2006 11:58:06 PM
Tags: collectors, debt, estate, irs, litter, nascar, tax
Categories: News/Current events
Comments (0) | Permanent Link
Tax debt collectors are down and out
The U.S. House of Representatives decided to give the IRS a little more money, but lawmakers also put limits on how the tax agency could spend the funds.
Specifically, the appropriations bill prohibits the IRS from hiring any more private debt collectors.
The restriction would not alter the debt collection contracts -- including one to Austin-based Linebarger Goggan Blair & Sampson, LLP -- that the the IRS announced in March (details here). Those have been on hold pending an investigation of an allegedly improper contracting process (details here).
When the matter is resolved, if it is resolved in favor of the three companies the IRS picked to track down unpaid tax bills, those firms will get to work on about 10,000 overdue IRS accounts. The IRS had originally hoped as many as 75,000 tax deadbeat cases would be handled by the private agencies, but the implementation delay has forced the agency to scale back expectations.
The agency sought another $54 million for the coming fiscal year to keep the program going beyond this initial phase. IRS Commissioner Mark Everson admitted to Congress that it would be cheaper to hire more IRS agents to do the job, but said the federal budget process makes that difficult.
The hiring of more IRS employees shows up as a budget expenditure, Everson told a House Appropriations subcommittee in March. The budget doesn't acknowledge the extra money the added employees might collect. And their budgetary costs count against the IRS as it competes with other agencies for revenue while the federal deficit is increasing.
The House members weren't swayed. So when fiscal 2007 rolls around Oct. 1, the IRS will have to make do with the employees they have to get taxpayers to pay their bills. No cash can be allocated for continuation of the private collection agency plan.
Opponents of hiring private debt collectors, and you can count me as one of them, are delighted with the House's fiscal restrictions on private bill collectors.
But I'll admit that the $20.7 million extra that the Representatives agreed to add for IRS operations (bringing the total tax appropriation to $10.5 billion) probably isn't going to do a lot to help close the estimated $290 billion tax gap.
The funding measure is still $104.5 million short of the agency's original budget request, and Everson warned that it "would result in personnel reductions within the IRS."
Hmmm. Money woes leading to rank-and-file personnel cutbacks. I guess Washington, D.C., is finally starting to run the government like private business.
Like what you see here? Get even more tax news, tips, commentary and humor on Kay Bell's main blog Don’t Mess With Taxes.
Posted 6.15.2006 5:54:42 PM
Tags: collectors, debt, irs, tax
Categories: News/Current events
Comments (0) | Permanent Link
Debt collection defenses
An Austin law firm looking to track tax deadbeats for government agencies has been smacked down a second time, this time in its own backyard.
Travis County executives this week tabled a proposal by Linebarger Goggan Blair & Sampson to collect delinquent tax bills from county residents even after a representative of the firm essentially offered a money-back guarantee on the service.
According to the Austin American-Statesman, Linebarger spokesman Ken Oden said his firm would forfeit "every nickel we make" if it couldn't collect as well as the county has.
Ah, yes. Money. That's the driving force behind outsourcing the collection of delinquent tax bills. Many state and local tax departments nationwide farm out this unsavory task. Uncle Sam wants to follow suit.
In fact, Linebarger was one of three firms that in March was awarded an IRS contract to collect federal tax debts. You can read about that announcement, and my misgivings about the process, here.
But things have not gone well for the IRS's outsourcing plan since then.
Just weeks after awarding the potentially lucrative federal tax contracts (the collection agencies will get to keep up to 24 percent of the amounts they collect), the IRS told the companies to stop (details here). Some of the firms that didn't get in on this initial phase of private tax debt collecting said they were passed over because of contracting irregularities and the goverment has put the plan on hold pending further investigation.
Apparently, the IRS inquiry is not the first time that the Linebarger group has been involved in an official investigation.
USAToday reported here that the Austin firm previously "has been tangled in legal controversy, including a bribery scheme involving a collection contract in Texas and a federal investigation of another collection deal in Louisiana."
Those allegations didn't come up at this week's Travis County meeting. The commissioners, according to the American-Statesman story, were primarily concerned with whether Linebarger could collect as much in unpaid taxes as county employees already do. Travis reportedly is the only urban county in Texas that collects its own delinquent taxes and is reputed to be the best in the state at doing so.
Oden, however, argued that his firm could match the money collection. He also questioned whether Travis County's tax collection system unintentionally punishes low-income minority residents with too many collection lawsuits, a contention that local minority leaders and organizations have recently echoed.
Both sides point to stats they say support the fairness or unfairness of Travis's current collection methods. Regardless, countered the county's tax assessor-collector, switching to a private firm would not resolve any concerns.
And such concern about ethical and equitable collection, folks, is the biggest problem facing private collection of tax debt at any level of government.
Dastardly debt collectors: Let's face it, debt collectors have an awful reputation. You can argue that they have to play hardball because deadbeats have been jobbing the credit system for too long. The money these losers refuse to pay costs us all in increased fees, higher interest rates and, when it comes to upaid government levies, more taxes.
Yes, greed also is a factor behind increased consumer costs. And yes, credit card and other loan companies use these unpaid accounts as an excuse to do what they really want to do, which is charge us more. But it does have to cost them something. Plus, delinquent accounts provide them easy cover.
But there's just as much evidence that collection agencies abuse both the system and those who, in many cases, face legitimate financial struggles. Have you ever been out of a job, out of savings and had to make hard choices about which bills to pay and which ones to let slide? If it's between the electic bill or the Visa card, I know which one I'd pay.
Many years ago, I had a run-in with a collection agency. Thankfully, it was all by correspondence rather than harassing phone calls or visits, and it was a mistake.
It seems that the billing manager at my doctor's office turned over all accounts that were two months overdue. That included mine, still unpaid because my insurance company was inordinately slow in processing my claim. (Medical insurance hassles are a whole 'nother pain-in-the-butt financial issue I'll look at later.)
Anyway, I freaked out when I opened that letter. I pay my bills. I've always paid my bills. Thankfully, I've always been able to pay my bills.
Then I got mad.
I called the collection agency and ranted at a couple of folks there (turn about is fair play). They sicced me on the doctor's office, and I did the same there.
Apparently many of the doctor's patients were in the same situation as I and had already done the same. By the time I called, the office manager had the apology/explanation speech down pat. The collection process was stopped, my health insurer eventually paid up and all was again right in the world.
But that, it seems, is not the usual way this process goes. Despite federal legislation to protect consumers against abusive debt collectors, the Federal Trade Commission regularly receives tens of thousands complaints about overzealous and unscrupulous collection agents.
If you find yourself facing a debt collector, even one that's not (yet) harrassing you, know what your rights are and what the collectors legal limits are.
Check out the Complaints continue section of this related blog for information on the Fair Debt Colleciton Fair Debt Collection Practices Act (FDCPA). This law was enacted in 1977 in response to, and I quote the legislative language itself, "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy."
You'll also find out where you can get more information about your rights in these cases. Here's hoping you never have to utilize these federal protections. But, as I found out, sometimes mistakes do happen.
So make sure you're prepared.
Like what you see here? Get even more tax news, tips, commentary and humor on Kay Bell's main blog Don’t Mess With Taxes.
Posted 5.18.2006 9:10:13 PM
Tags: bill, collector, debt, taxes
Categories: Other, News/Current events
Comments (0) | Permanent Link
Private tax collection on hold
A couple of weeks ago the IRS awarded contracts to three private firms that would soon start collecting money that taxpayers owed the IRS.
That plan is now on hold.
The IRS has issued a stop-work order to the firms, which included, from right here in Austin, Linebarger Goggan Blair & Sampson, LLP. You can go here to read more about the contracts and why many, including yours truly, thinks such outsourcing is not such a good idea.
CCH, the publishing and tax software company, reports that the IRS put the brakes on the controversial collection plan after GC Services LP and Diversified Collection Services, Inc., filed protests with the Government Accountability Office, which handles contracting disputes involving any federal agency.
The complaining companies were among the 30 that did not make the initial cut in the contract process.
Private debt collectors, many of whom don't have, shall we say, the most savory of reputations when it comes to dealing with "customers," were slated to begin collecting on the IRS' behalf this summer. The IRS is hopeful that the timetable won't be pushed back too far.
According to CHH, the IRS responded the to companies' filings by saying "protests are not unusual in the procurement process." The agency also said it will continue to prepare for the use of private debt collectors until the protest is resolved and will "respond accordingly when (the) GAO issues its ruling."
Longer term,the IRS is looking to hire around seven more debt collection agencies by 2008 to go after what the IRS says will be "relatively simple cases" in which taxpayers have acknowledged that they owe Uncle Sam.
But for now, the IRS has until April 17, the same deadline most of us also face to get our returns at least en route to the agency, to provide the GAO with a report on its side of the matter. The GAO has until June 26 to issue its decision.
Posted 3.27.2006 4:13:41 PM
-
David A. Szwak
- Posts: 1974
- Joined: Thu Jul 13, 2006 11:19 pm
IRS Hires Debt Collectors
http://creditfederal.com/article/articl ... Collectors
By Credit Federal
IRS hires debt collection agencies
IRS Hires Debt Collection Agencies: The IRS has hired three debt collection agencies (The CBE Group of Waterloo, Iowa; Linebarger Goggan Blair & Sampson of Austin, Texas; and Pioneer Credit Recovery of Arcade, N.Y.), and plans on hiring at least seven more to pursue past due tax payments.
The IRS has hired three debt collection companies to help collect unpaid tax debts. There is as much as $7.7 billion in unpaid taxes, so now the IRS is sending the debt collectors after delinquents. One can only hope that the Government will stick by the same "Debt Collection Rights" they had imposed upon collection agencies.
In 2004, Congress gave the IRS authority to hire debt collection agencies. The IRS plans to expand the limited trial of hiring three debt collection agencies to as many as 10 companies in 2008.
According to IRS Commissioner Mark Everson, many states use private companies to collect unpaid taxes. He stated: "Redirecting relatively simple cases to private firms will permit the IRS to focus its existing collection and enforcement personnel on more complex tax issues."
Some lawmakers, consumer advocates and the IRS employee labor union have expressed concerns about how this will affect taxpayer privacy. If they are concerned, you should be, too.
"Taxpayers deserve much better than this program," said National Treasury Employees Union President Colleen Kelley. "Their personal, sensitive and private information should not be divulged by our government."
Companies with contracts for debt collection will get some basic information about taxpayers and the size of the tax debt. The companies are required to abide by federal debt collection laws, state laws and IRS rules protecting taxpayer privacy. Of course, how well and to what degree this will be enforced, remains to be seen.
"These organizations are highly regulated, and each individual debt collector as well as the company itself, are subject to the Fair Debt Collection Practices Act," said Rozanne Andersen, general counsel and senior vice president of legal and government affairs at ACA International, a credit and collection industry association.
What is stated about what debt collection agencies may do: The companies can track down taxpayers to request payment. If the debt cannot be paid in full, the company can set up a payment schedule up to five years long. Taxpayers would submit the money to the IRS. The law allows debt collectors to be paid as much as a whopping 25% of the taxes collected. If ever there was a better time to become a debt collector... now is the time.
Debt collection employees are subject to background investigations, but how thorough is not yet known. Employees must comply with federal tax laws, and all work must be done in the United States. One uncertainty raised by CreditFederal.com, is whether or not some agencies will outsource any portion to other agencies, or worse, to an overseas call center for the purpose of making initial contact with deliquent payers.
Employees who disclose taxpayer information illegally could be charged with a felony, punishable with fines and imprisonment. Looking at taxpayer information without authorization could also be punished.
Private firms will not be authorized to take enforcement actions such as liens, levies or seizures. In addition, private firms will not be authorized to work on technical issues such as offers in compromise, bankruptcies, hardship issues or litigation. Rather, the IRS will assign to the private firms cases in which the taxpayer has not disputed the liability. The private firms will contact taxpayers to make payment arrangements.
"Redirecting relatively simple cases to private firms will permit the IRS to focus its existing collection and enforcement personnel on more complex tax issues," Everson said.
One definitely good word, is that agencies hired to collect debts cannot use any information gleaned during a tax collection to pursue other unpaid debts. But CreditFederal.com is not certain if that means they cannot sell portions of the information to other collection agencies.
The IRS plans to write the training curriculum for private companies and monitor the quality of their work. If it's anything like how the government monitored Katrina recovery... well, enough said.
http://creditfederal.com/article/articl ... Collectors
By Credit Federal
IRS hires debt collection agencies
IRS Hires Debt Collection Agencies: The IRS has hired three debt collection agencies (The CBE Group of Waterloo, Iowa; Linebarger Goggan Blair & Sampson of Austin, Texas; and Pioneer Credit Recovery of Arcade, N.Y.), and plans on hiring at least seven more to pursue past due tax payments.
The IRS has hired three debt collection companies to help collect unpaid tax debts. There is as much as $7.7 billion in unpaid taxes, so now the IRS is sending the debt collectors after delinquents. One can only hope that the Government will stick by the same "Debt Collection Rights" they had imposed upon collection agencies.
In 2004, Congress gave the IRS authority to hire debt collection agencies. The IRS plans to expand the limited trial of hiring three debt collection agencies to as many as 10 companies in 2008.
According to IRS Commissioner Mark Everson, many states use private companies to collect unpaid taxes. He stated: "Redirecting relatively simple cases to private firms will permit the IRS to focus its existing collection and enforcement personnel on more complex tax issues."
Some lawmakers, consumer advocates and the IRS employee labor union have expressed concerns about how this will affect taxpayer privacy. If they are concerned, you should be, too.
"Taxpayers deserve much better than this program," said National Treasury Employees Union President Colleen Kelley. "Their personal, sensitive and private information should not be divulged by our government."
Companies with contracts for debt collection will get some basic information about taxpayers and the size of the tax debt. The companies are required to abide by federal debt collection laws, state laws and IRS rules protecting taxpayer privacy. Of course, how well and to what degree this will be enforced, remains to be seen.
"These organizations are highly regulated, and each individual debt collector as well as the company itself, are subject to the Fair Debt Collection Practices Act," said Rozanne Andersen, general counsel and senior vice president of legal and government affairs at ACA International, a credit and collection industry association.
What is stated about what debt collection agencies may do: The companies can track down taxpayers to request payment. If the debt cannot be paid in full, the company can set up a payment schedule up to five years long. Taxpayers would submit the money to the IRS. The law allows debt collectors to be paid as much as a whopping 25% of the taxes collected. If ever there was a better time to become a debt collector... now is the time.
Debt collection employees are subject to background investigations, but how thorough is not yet known. Employees must comply with federal tax laws, and all work must be done in the United States. One uncertainty raised by CreditFederal.com, is whether or not some agencies will outsource any portion to other agencies, or worse, to an overseas call center for the purpose of making initial contact with deliquent payers.
Employees who disclose taxpayer information illegally could be charged with a felony, punishable with fines and imprisonment. Looking at taxpayer information without authorization could also be punished.
Private firms will not be authorized to take enforcement actions such as liens, levies or seizures. In addition, private firms will not be authorized to work on technical issues such as offers in compromise, bankruptcies, hardship issues or litigation. Rather, the IRS will assign to the private firms cases in which the taxpayer has not disputed the liability. The private firms will contact taxpayers to make payment arrangements.
"Redirecting relatively simple cases to private firms will permit the IRS to focus its existing collection and enforcement personnel on more complex tax issues," Everson said.
One definitely good word, is that agencies hired to collect debts cannot use any information gleaned during a tax collection to pursue other unpaid debts. But CreditFederal.com is not certain if that means they cannot sell portions of the information to other collection agencies.
The IRS plans to write the training curriculum for private companies and monitor the quality of their work. If it's anything like how the government monitored Katrina recovery... well, enough said.