Erin Arvedlund of The Philadelphia Inquirer reports
Beginning this month, the IRS has revived the use of debt-collection companies, and will start sending about 100 letters a week out to those with long-overdue federal tax accounts. If you are one of those people, your back taxes will be assigned to one of four private-sector collection agencies.
The controversial program — it’s opposed by the IRS agents’ union and Nina Olson, the national taxpayer advocate — will grow to 1,000 letters a week for each firm by the end of summer.
The IRS has tried private debt collectors before. Congress stopped the practice in 2009, and has now reauthorized their use. It's an experiment that will be closely watched by lawmakers.
On a positive note, "through letters from both, you'll hear from the agency and a debt collector." Moreover, the chance of fraud is diminished because
Debt collectors can identify themselves as “contractors” of the IRS, but they can’t bully you. They must adhere to the Fair Debt Collection Practices Act. Like IRS employees, they must be courteous and respect taxpayer rights, the agency said in a press call with reporters.
Once the IRS sends you a letter, your designated private debt collector will send its own letter and a representative confirming the account transfer. To protect the taxpayer’s privacy and security, both letters are supposed to contain information on the tax amount owed.
Never send money.
The four debt collectors are authorized to discuss payment options. But any tax paid must be sent, either electronically or by check, to the IRS or U.S. Treasury.
It won't all stay with the US government because, Arvedlund writes, "the debt collectors can keep up to 25 percent of what they get back for the Treasury." Further
“Most taxpayers owing tax debt to the IRS simply do not have the ability to pay,” said Michael Gillen, of the law firm Duane Morris. “Such taxpayers need to protect themselves, not from the IRS, but from scammers.
"The use of private debt collectors to collect delinquent tax debts is a potential minefield for taxpayers with valid tax debts, given the proliferation of tax scams and the overwhelming presence of fraudsters posing as IRS representatives attempting to collect debts, Gillen said. "Such fraudsters will certainly try to capitalize on the use of private debt collectors.”
At first read, this public-private partnership would seem to have its advantages. But not so much. As Ann Hagedorn wrote for The American Prospect
Privatization, in sum, is effectively a fraud. When a product is provided purely via the market, and there are no public purposes involved, market accountability can work. Consumers can compare price and quality, and give their business to the vendor offering the best product at the most attractive cost. Alternatively, when government performs a function directly, there are public forms of accountability, such as congressional hearings and GAO investigations. But when a public function is privatized, the result is a muddled middle ground, where neither market accountability nor public accountability works well because of all the layers of intermediaries. Enthusiasts of markets claim that government is the domain of political corruption, while markets are transparent. But the actual track record of privatization shows that there can be at least as much corruption and deception in privatizing a service as in providing it directly. For all the rhetoric about public-private partnerships, our society works better when we keep public functions public and private ones private.
This was written in 2015, so it can't be blamed on Donald Trump. But a windfall for private investors posing as an infrastructure plan, undermining the Corporation for Public Broadcasting, shifting public education funds into private and religious schools and air traffic control to a non-governmental organization, plans to weaken the Veterans Administration system, and the likelihood of replacing government workers with federal contractors, demonstrate there is little in this country Donald Trump won't try to privatize. And when it's a public-private partnership as with the IRS, failure will be blamed on government as rationale for even more privatization. Bet on it.