NBC Connecticut Troubleshooters caught up with officials from the IRS to find out more about their new debt collection program and how they're going to protect taxpayers from getting scammed.
This spring, debt collectors hired by the IRS will start making collection calls to go after money on old tax debts. This could lead to confusion as the fake IRS debt collection scam call is one of the number one scams in the country. In the past, the IRS has repeatedly said they will never call you collect money. Instead, they send a letter. This change could open the door to crooks who might see this as opportunity to reach out to more people using the IRS’s name. It’s too early to gauge how the ongoing phone scam will impact real IRS debt collection call efforts. But people targeted by the scheme say it will be confusing.
“Well I think it’s going to open it up to the scammers,” said Dave Lillian who was recently contacted by fraudsters claiming to be IRS debt collectors. “It’s almost legitimate.”
The collection program came about because a law called the FAST Act passed in 2015 requiring the Internal Revenue Service to use private debt collectors to go after tax money on older accounts. The money would help pay the FAST Act’s $305 billion price tag to fund transportation and infrastructure.
Senator Richard Blumenthal voted for the bill, however, he has concerns about the IRS collection provision.
“This provision was not considered separately it came out of the Finance Committee as part of the overall bill that provided billions of dollars to Connecticut for rebuilding our roads and bridges,” said Blumenthal. “This provision simply benefits a private industry at the expense of tax payers and leads to potential abuses, and that is why I opposed it and will seek to repeal it.”
The IRS hired the companies CBE Group, Performant, Pioneer and Conserve to make the collection calls. However, this isn’t the first time the agency has tried to use debt collectors.
In 2006 the IRS hired Pioneer, CBE Group and a company called Linebarger Goggan Blair & Sampson to try to collect an additional $1.4 billion in past due taxes. It fired the debt collectors in 2009 saying it wasn't cost effective to use private collectors and the “work is best done by IRS employees.”
“We are certainly doing everything this time around to make it more efficient to make sure that tax payers are aware on their side,” said Patricia J. Russomagno, IRS spokesperson. “And then the private debt collectors are adhering to our tax payer bill of rights. When they call , they are doing the same thing that we would do in terms of the way they treat the taxpayer and they opportunities that they allow the taxpayer when they call and ask for payment.”
However, one IRS debt collector has recently been accused of not acting in peoples best interest. Pioneer was mentioned in lawsuits filed by the Illinois Attorney General and the Consumer Finance Protection Bureau accusing the business and its parent company Navient of taking advantage of borrowers.
In a statement Navient calls the claims “unsubstantiated” and “politically driven.”
The IRS responded to us in an email saying “The existence of a lawsuit or a potential lawsuit does not affect the IRS’s relationship with its contractors.” They also said they have requirements to “prevent inappropriate activity on the part of the contractor.”
Real or fake, collection calls make money. Government officials say since 2013 scammers have dialed their way to $54 million.
The IRS said you will get a letter in the mail before a debt collector calls you and they will never demand money on the spot . Remember when in doubt pick up the phone and call the IRS directly .