IRS to use private debt collectors as phone scams abound

The Internal Revenue Service announced Tuesday it will be using private debt collection companies to track down Americans who owe the government money.

The IRS had previously contracted with private firms until 2009, but Congress passed a law requiring the agency to outsource debt collection in 2015.  Debt collectors will get to keep 25 percent of the outstanding debt that is retrieved.

The restart of the outside debt collection program coincides with an increased number of IRS scams, which usually entail a phone call where the scammer impersonates a government agent and threatens the target with jail time if they do not hand over the money immediately.

According to News 6 WKMG Orlando, the U.S. Treasury Inspector General for Tax Administration says 5,500 Americans have paid $29 million to IRS scammers since 2013.

The IRS says they are aware of the rash of scams and are taking precaution measures to protect citizens. According to Mary Beth Murphy, who is in charge of the agency’s small business and self-employed department, the IRS is aware of the increased risk.

“The IRS remains extremely concerned about the many con artists out there who masquerade as IRS employees or contractors,” said Murphy.

“We urge everyone to be on the lookout for scammers who might use this program as a cover to swindle taxpayers,” she said.

One of the measures the IRS to combat various schemes is by sending letters to citizens who owe back taxes. First the the agency will notify taxpayers by mail, then the debt collection company will send a subsequent letter.

Taxpayers who owe money should receive two mailed notices before ever receiving a phone call from a debt collection agency.

The program is controversial among interest groups and lawmakers. Some say that the use of debt collection agencies does more harm than good as it can make some taxpayers distrustful of the entire process.

“The private debt collection program is a disservice to American taxpayers. It undermines the confidence Americans should have in government action,” said Rep. John Lewis (D-Ga.).

Regardless of opinion, the program is being implemented across the United States. April 18 is coming up fast — file those taxes lest a debt collection company start harassing you years down the road.

[AP] [CNN Money] [ClickOrlando.com] [Photo courtesy CNBC]