Private Debt Collection

Private debt collection is a program that the Internal Revenue Service uses in the effort to collect unpaid accounts on individuals who owe income tax. This program allows private companies to locate taxpayers who owe the IRS money. Those whose accounts have been assigned to private debt collection will receive a letter stating who the agency is that will be collecting on their obligation. Taxpayers do have the option to not deal with the private companies but they have to write a letter requesting to deal only with the IRS. Private collection agencies (PCA) do have some specific guidelines they have to follow when trying to collect money. Each time the taxpayer is contacted the PCA has to authenticate the identity of the taxpayer. Authentication is usually done by asking the person's name, address, four digits of the social security number, and date of birth. A PCA can not accept payments made out to them but must direct the taxpayer to pay the IRS.

Remittance of payments should be sent to the IRS and not to the PCA. Taxpayers should never send cash but should send a check or money order. Other options for remittance with private debt collection include electronic transfer by using the Electronic Federal Tax Payment System online. A person can use a credit card by calling in the payment to the IRS. When mailing in a payment the taxpayer should consider sending it return receipt requested or certified mail so that he or she knows it was received by the IRS. A person should keep the receipt for proof that the payment was received by the IRS. The receipt could help to remove any late charges or interest that has been added to what is due.

Every taxpayer is allowed access to the publication for private debt collection that spells out the policies and procedures for a PCA by accessing it on the IRS website under publications. Normally collection agencies are under the guidelines of the Fair Debt Collection Act. This Act protects consumers from harassment. This would include making false statements or threats, calling them before 8 a.m. and after 9 p.m., or using profanity. The agency can not make threats of law suits or garnishment of wages and can not contact a person at his or her job unless the employer has allowed them to do so. The taxpayer must send a letter requesting that they discontinue harassment proceedings before anything can be done. If this does not stop them from harassment then there needs to be complaints given to the proper authorities.

Some of the unfair practices that may happen with agencies include depositing a post-dated check before the actual date on the check, trying to get the debtor to pay more money than what is actually owed, and threatening to take security such as property for the amount owed. Private debt collection should never include threats, deception, or abusive language. Any agency that conducts business in an unprofessional manner should be turned in to the Federal Trade Commission and the Attorney General's office. In addition, the Better Business Bureau should be notified as well. This helps to keep other individuals from suffering with the same types of problems.

Anytime a taxpayer owes money to the IRS for back taxes there is interest charged on top of what is owed. Taxpayers are allowed to file an extension in April that gives them until August to pay their taxes. A private debt collection agency will collect on the entire amount owed which will probably include interest. The amount of interest will depend upon how late the taxes are. A taxpayer that owes taxes can make payment arrangements with the IRS to pay so much each month until the amount is completely paid off. This can be done through automatic bank draft through the person's checking account. Then she came and told the man of God. "And he said, Go, sell the oil, and pay thy debt, and live thou and thy children of the rest" (2 Kings 4:7).

Private organizations that work for the IRS with private debt collection should be trained according to Federal policies and procedures including the importance of confidentiality and privacy of taxpayers. The PCA must comply with all the rules about taxpayer documentations to prevent anyone else from accessing the information. Part of doing this includes not sharing the information with anyone else even when they are trying to locate the debtor. If a PCA does not comply or breaches polices and procedures the taxpayer should notify the IRS immediately. The PCA is not only subject to the policies of the IRS they must comply with the Fair Debt Collection Act.

The best way to avoid having to deal with collection agencies is by paying obligations in a timely manner or making arrangements with the creditor or IRS to do so. Private debt collection companies work with the IRS and work with other creditors to recover money owed to them. The process can be accomplished without unlawful practices. The longer the debtor waits to pay the amount the more interest and late fees will apply. If a taxpayer sees that he or she can not pay taxes then the best thing to do is contact the IRS to make payments each month until the amount is paid in full. Waiting will result in more money owed and will eventually lead to collection proceedings.

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