In a previous blog post we discussed that this year, private debt collectors would be targeting taxpayers who owed late payments of up to $50,000 in back taxes to the IRS. These private debt collectors have now been accused of using illegal and abusive tactics to extract payments from taxpayers for the IRS. Based on call scripts that the private debt collector company Pioneer submitted to the IRS for approval, senators have accused Pioneer, the IRS, and the Treasury Department of acting in “clear violation” of the tax code.
Pioneer has engaged in particularly aggressive and dangerous tactics. Among these tactics, Pioneer has pressured taxpayers to:
• Liquidate their 401(k) plans, which would result in additional penalties if the taxpayer was under the age of 59 ½ and threaten the taxpayer’s retirement security;
• Take out a second mortgage, using their homes as collateral; and
• Max out their credit cards to pay their outstanding tax debts.
Additionally, the IRS has authorized Pioneer and other private debt collectors to set up installment plans with taxpayers that last up to seven years. According to the tax code, private debt collectors are only allowed to offer taxpayers an installment agreement that lasts up to five years. The IRS has claimed that private debt collectors may set up installment agreements longer than five years with approval from the IRS. However, the national taxpayer advocate strongly disagrees.
As we discussed in our other blog post about private debt collectors, the IRS must mail you a notice stating that you have overdue taxes before private debt collector contacts you. You can always deal with the IRS directly instead of going through a private debt collector, as well. Additionally, if you hire an attorney or registered agent to represent you, the IRS must contact that representative instead of contacting you.
Taxpayers should be aware that payments should never be sent to the private debt collector – all payments should be sent directly to the IRS or the Department of Treasury. The IRS can also never demand that you use a certain type of payment. If you cannot pay your tax debt all at once, you have other options. You could enter into an installment agreement or submit an Offer in Compromise.
For assistance with dealing with the IRS and other tax issues, please call us at 404-537-5030.