IRS is using debt collection agencies
The IRS begain handing over it’s “less glamorous” collection work(under 25k) to a group of debt collection agencies.
The three companies that will be doing the collections are CBE Group of Iowa, Linebarger Goggan Blair & Sampson of Texas, and Pioneer Credit Recovery of New York. The companies will be paid 25 percent of the amount they are able to collect.
With the move, the IRS sheds some light on a whole category of cases that it hadn’t touched for years - its own agents will continue to concentrate on higher-ticket cases, where there are greater rewards for their efforts.
The first thing that comes to mind when I hear this is the potential security issue. What happens if one of these agencies loses a laptop? Granted, the people wouldn’t exactly be stellar examples for ID theft, but the risk is still there. There are three other risks that the article lists, one of which is the risk of added work in the long run. The accounts are un-contested accounts, but if any of the fees and interest are contested, the account would have to be returned to the IRS for further negotiation.
Essentially, it seems like the IRS is using the collection agencies as a call center to do the mundane collection tasks. At 25%, it might still save some taxpayer money in reduced hours on the IRS timeclock. If it works quicker and more effeciently than current practices, it could mean a little extra cushion for your favorite senator’s porkbarreled project.
Technorati Tags: IRS, collection, tax debt
Like this post? Subscribe by RSS
Or if you prefer, Subscribe by Email
Related Posts:
Brady said,
Wrote on September 14, 2006 @ 9:35 pm
This is rather ironic actually since the IRS could collect these debts far easily and more quickly if they had the staffing to do it. Not to mention the fact that it doesn’t cost the IRS 25% of the collection amount to haul in deadbeats. The IRS has a lot more at their disposal than those debt collecting agencies have. All they can do is harass people, send them nasty letters, and ruin their credit.
The IRS can pull any public record to find tax evaders including many that aren’t available to outside agencies. They have a massive staff of lawyers and accountants on hand to scare the hell out of anyone who would contest what they owe and they can file criminal fraud charges against anyone who evades collection in the civil system.
I know several auditors (one of which I share a last name with
who tell me stories about collecting money from these individuals. I’m often surprised by how many avenues they have to get money. Needless to say I’d rather owe a credit card company money than the IRS.