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IRS is Turning Over Accounts to Private Debt Collectors

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    There you have it, folks. The Taxman cometh with the aid of little helpers, private debt collectors. Are you as shocked as I am? Like this article from the Chicago Tribune says, such a thing is being deployed during a time in our country where Americans are being victimized by con artists, posing as the IRS, threatening jail and garnished wages. It's bad timing if you ask me, which makes me wonder what kind of difficult times has the IRS found itself in for it to turn to one of America's public enemies, telephone debt collectors.

    Congress passed a law back in 2015 requiring the IRS to start up the program, even after the IRS stopped using private debt collectors in 2009. The IRS was certain that their own employees could do a better job. Apparently congress doesn't agree.

    Soon, the IRS will begin turning over the accounts of 100 taxpayers a week to four different debt collecting agencies. It will later increase to 1,000 accounts a week for each agency, as early as the end of summer. Each agency is allowed to keep up to 25% of what they collect.

    So how is the IRS going to win the fraud game, you ask? They are going to send letters. Yep, letters. I can't remember receiving actual mail that didn't go directly into the trash with the coupons and lawn care flyers. The debt collectors will send their own letters, following those from the IRS.

    Honestly, I don't see how that will deter any scammer from continuing to rob people of their hard-earned money. If anything, the IRS just opened up the playing field, broadening the scope, giving scammers more tools for their tool box. Since 2013, more than 1.9 million people have been called by fake government agents. Over 10,300 victims have paid more than $55 million to scammers.

    Three guidelines to go by:

    1. You won't be contacted unless you have unpaid taxes which go back several years, as well as having a history of calls from the IRS.

    2. All payments will and should be made to the U.S Treasury.

    3. They will never call and threaten to bring police to your house, or have you arrested.

    Do you think this is a good idea? I can only see this get uglier as it goes on.

    Here's a video of hundreds of scammers being busted by the U.S in India.

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    Not a good idea. But it does make me realize even further just how inadequate the IRS is at handling everyone's taxes. The IRS is very bogged down, and far too complicated. Unfortunately it's the perfect example of government doing a job worse than the private sector.

    That said, simply passing on the debt is not making use of the private sector for efficiency. No, instead its making the government more money, and getting outside parties to do their dirty work for them.

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    I have conflicting opinions on this.

    On one hand, I struggle with the concept of the government handing over someones tax information to a third party. On the other, this program seems to be tailored towards individuals who haven't responded to the IRS's numerous communications to set up a payment plan to pay down their debt.

    It's very easy to set up a payment plan for debt owed to the IRS. I had to do it myself a few years ago and they worked with me to make it as easy as possible. They asked how much I could afford each month and then set up a plan for my tax debt to be paid off over three years. They also have plans that can spread out over an even longer period for people who owe a lot of money.

    That hasn't changed with this new program. All that's seemed to change is that the IRS is now sending the information of people who refuse to respond to their communications to a third party in order to try to obtain the tax debt that is owed to the government. As Benjamin Franklin famously said - "[I]n this world nothing can be said to be certain, except death and taxes.”