Lexington Tax Attorney

A New Law Revives an Old Program

June 7th, 2017 by Bunch & Brock

Lexington Tax Attorney

As the result of new federal regulations passed by Congress last December, the Internal Revenue Service (IRS) has announced they are bringing back a program discontinued several years ago amidst claims it was ineffective. As a means of collecting overdue taxes, the IRS has contracted four private collection agencies, two in New York, one in California and one in Iowa, to collect federal debts.

New Law

An IRS statement on their website explains the decision to return to the old program. It explains that the agencies will work on accounts where “taxpayers owe money, but the IRS is no longer actively working them.”  The contractors will generally work old, overdue accounts and accounts the agency simply doesn’t have resources to spend on. The IRS stated they will not refer specific groups of taxpayers to contractors, including those who are:

  • Deceased
  • Under the age of 18
  • In designated combat zones
  • Victims of tax-related identity theft
  • Currently under examination, litigation, criminal investigation or levy
  • Subject to pending or active offers in compromise
  • Subject to an installment agreement
  • Subject to a right of appeal
  • Classified as innocent spouse cases
  • In presidentially declared disaster areas and requesting relief from collection.

Scams

One of the issues with the collection agencies is that they make phone calls in addition to sending notices. The problem is that, in the past years, criminals have been placing calls claiming to be IRS agents collecting taxes in order to bilk individuals out of money. In February of last year, the IRS released a statement about the phone scams, warning people not to be fooled. The scam was so prevelant, in fact, the IRS reported they had received information about 896,000 different contacts between October, 2013, and last February and know of roughly 5,000 victims that have collectively lost more than $26.5 million.

Safeguards

However, the IRS states they have taken precautions. While phone scammers are generally described as aggressive and rude, demanding payment in specific forms to access their victim’s money, the IRS emphasizes their contractors are bound by the Fair Debt Collection Practices Act (FDCPA), which restricts them from using aggressive, including abusive, unfair or deceptive tactics, to collect. The IRS also states that they will notify individuals who will be assigned to the collection agencies of their status by written notice, after which the agencies themselves will send written notice of their intention to collect the debt. And the IRS has set up a site at IRS.gov/Pay Your Tax Bill which gives consumers electronic options to pay directly to the service. Another protection is that checks should be made out to the U.S. Treasury and sent directly to the IRS. The IRS has stated they will make every effort to avoid confusion and protect the consumer from scams. To that end, they have made available a list of steps the service will not take to help differentiate the real IRS from impostors. Neither the IRS nor its contractors will:

  • Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

There are still many questions about the program, especially about how it will work. It was dropped last time, at least in part, because of a lack of effectiveness. However, only time will tell.

For more than 35 years, the attorneys at Bunch and Brock have been serving our community and the entire state of Kentucky with their legal needs. We don’t just serve the community – we are members of it, and we look forward to helping our neighbors when they need us. If you have legal questions or would like to set up an appointment contact us online or call us at 859.254.5522.