What’s Next? Dog the Bounty Hunter?
Don’t look now, but Congress is giving the IRS another stab at using private debt collection firms to collect unpaid taxes.
This is something that has been tried a couple of times in the past with arguably mixed results, but that didn’t stop Congress from including the provision in the recently past "FAST Act", a five-year highway infrastructure spending bill, which the President signed into law December 4th.
So now, in addition to the IRS bugging you if you have unpaid taxes, so might a private collector.
Actually, the IRS has had the authority to do this for some time and has just chosen mostly not to do so, but now the law makes it mandatory that the IRS use private collections in the case of "inactive tax receivables".
Inactive tax receivables are those:
- Where the delinquency is removed from active collection inventory for lack of resources or inability to locate the taxpayer;
- Where more than 1/3 of the applicable limitations period has lapsed and no IRS employee has been assigned to collect the receivable; or
- For which, a receivable has been assigned for collection, but more than a year has passed without any interaction with the taxpayer or a third party for the purpose of advancing the collection.
There are also some tax delinquencies that the new law prohibits going to private collection. These are:
- A tax due subject to a pending or active offer-in-compromise or installment agreement;
- An innocent spouse case;
- One involving a taxpayer identified by the Secretary of the Treasury as being deceased, under the age of 18, in a designated combat zone, or a victim of tax-related identity theft;
- A taxpayer that is currently being audited, in litigation, criminal investigation, or levy; or
- A situation where the taxpayers has gone to IRS Appeals.
From what I can tell, the law doesn’t even necessarily require the private collectors to identify why they are making the contact.
That provision of the law is at best vague, in my opinion, as it says they "may" (notice it’s not "must") identify themselves to taxpayers as IRS contractors, as well as the subject and reason for the contact.
Further, disclosures are "permitted only in situations and under conditions approved by the Secretary." What does that even mean?
With all the scams occurring lately where taxpayers are being contacted by phone, email, etc. by phony "IRS" agents, this most certainly will cause further confusion, if not actually encourage fraudsters.
If you are someone that travels quite a bit, one provision you may need to know about is the law gives the IRS the power to revoke your passport for unpaid tax bills.
This is especially important going into 2016, where passports will be required for some domestic travelers hailing from states that failed to meet strict standards for state-issued IDs (Arkansas is not one of those state, by the way).
The law gives the IRS only 3 months to begin entering into contracts and agreements for private collection, so no doubt there will be a flurry of new information revealed soon.
However, taxpayers with delinquent tax bills need to be aware now that "Dog" may be coming!
