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IRS set to use private debt collectors

The IRS announced Monday that it plans to start a new private debt-collection program in the spring.

The program was authorized by a transportation funding law enacted last December. Contractors will work on the government’s behalf to collect debts from taxpayers who owe money but whose accounts are no longer being worked on directly by the IRS.

{mosads}The IRS said it has chosen four agencies to carry out the program. Two of the contractors are based in New York, one is based in California, and one is based in Iowa. The contractors are supposed to follow provisions of the Fair Debt Collection Practices Act and respect taxpayers’ rights, the IRS said in a news release.

Cases that will be assigned to the contractors will include older accounts with overdue debts and accounts that the IRS doesn’t have the resources to handle itself, the IRS said.

Taxpayers whose accounts are being transferred to private debt-collection agencies, along with their representatives, will be notified by the IRS in writing. The contractors will then confirm in separate letters that the cases were transferred.

Some lawmakers have expressed concerns about the IRS starting a new private debt-collection program. Rep. John Lewis (D-Ga.) said at a hearing in April that during previous pilot programs, the costs exceeded the amount that was collected and taxpayers felt like they were harassed.

The IRS said that it “will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment.”

The president of a union that represents IRS employees said Monday that the IRS shouldn’t be using private debt collectors and instead should keep employees who are set to lose their positions at sites that process paper tax returns.

“Many of these workers have been loyal employees of the IRS for decades but only some of them will get other jobs within the agency. The smart and humane thing to do would be to retrain the remaining workers to collect delinquent taxes rather than outsourcing IRS jobs,” National Treasury Employees Union National President Tony Reardon said.

“There’s absolutely no need for Congress to outsource this important work to the most complained about industry in America when there’s more than enough in-house talent available.”

– updated at 3:16 p.m.

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