Commercial Collections Blog

Tax Debt Collection and You

In the past, the Internal Revenue Service (IRS) has failed to turn their debts over to private debt collectors successfully. In 2017, the Fair Debt Collection Practices Act was passed, trying yet again. There have been many complaints from taxpayers about how those private companies go about collecting debts. Pioneer Credit Company is one of the main agencies that has many complaints against it. One of the complaints is that Pioneer is failing to protect taxpayers from criminals who pose as IRS agents. Pioneer is also putting pressure on taxpayers to make risky financial payments. There is also a problem with Pioneer connected with abuse of federal student loan borrowers. Despite all of these concerns and many more, accounts are still being handed over to private companies for collection.

Protect yourself from unlawful collection practices

Tax Debt Collection
Tax Debt Collection – Burt and Associates

Expect a letter from IRS and collection agency

As a taxpayer, you can protect yourself from shady debt collecting practices by being aware of your debt situation. First of all, the IRS must send you a letter to notify you that your debt is being turned over to a private collection agency. The collection agency will also send you a letter confirming the transfer. In other words, if a private agency contacts you first, it is not legitimate.

All payments go to the IRS

Another important thing to know is that your payments must go to the IRS, never to a debt collector or person. If you write a check, make it out the United States Treasury. You should never be asked to pay by any method like wire transfer or gift cards. Always pay online through the IRS payment website, never give your credit card number over the phone to a collection agency.

No liens, threats or abuse

Private tax debt collectors aren’t allowed to enforce collections on taxpayers by using liens or levies. The Fair Debt Collection Practices Act (FDCPA) states that it’s illegal for collectors to intimidate or harass taxpayers. For example, they can’t claim that you owe more than you do, or threaten to have you arrested if you don’t pay your debt immediately. They also cannot threaten you with other agencies like immigration issues. Harassment is also illegal, which means they can’t use profane language or call you repeatedly to annoy you.

How debt collectors can contact you

Private tax debt collectors can reach you via letters, emails, phone, or text messages. They aren’t allowed to contact you at odd hours, which usually means any time before or after 8 am to 9 pm. They can’t call you at work if you have told them they shouldn’t. Also, if someone else happens to answer your phone, they aren’t allowed to talk about your debt with anyone else except you or your spouse. If you have an attorney, you can refer the collector to your attorney. Private tax debt collectors may ask other people how to get in touch with you, but they aren’t allowed to harass those people either.

Risky financial solutions

One of the many complaints against private debt collectors, namely Pioneer, is that they pressure taxpayers to make risky financial decisions to pay their debt. For example, shifting debt to credit cards, taking out a second mortgage or borrowing against your 401K. All of these solutions can leave you in a terrible place financially. You should not make any decisions that are risky for you or that you aren’t able to support financially.

People that SHOULDN’T be called by debt collectors

There are certain cases that the IRS won’t assign to a private debt collector. If you fall into any of these categories or represent someone who does, then you shouldn’t be getting calls from private tax debt collectors.

  • Dead
  • Minors (less than 18 years old)
  • In combat zones
  • Victim of identity theft (must be tax-related)
  • Currently dealing with levy, examination, litigation or criminal investigation
  • Pending or active offers in compromise
  • Agreed to an installment
  • Subject to the right of appeal
  • Innocent spouse
  • Living in disaster areas and requested relief from collections

Your rights as a taxpayer

When you owe money, you may feel like you don’t have any rights and are at the whim of a collection agency. That is not true. You still have rights as a taxpayer, even if you are in debt. Knowing your rights will help you stand up to unfair collection practices. You have the right to the following:

  • To Be Informed
  • To a Quality Service
  • Pay No More than the Correct Amount of Tax
  • Challenge the IRS’s Position and Be Heard
  • Appeal an IRS Decision in an Independent Forum
  • Finality
  • Privacy
  • Confidentiality
  • Retain Representation
  • Fair and Just Tax System

Click here for more information on your rights as a taxpayer.

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