We here at B&J know that taxes can be a nightmare for any kind of bookkeeping , and the IRS doesn’t seem to be the most customer-friendly agency anywhere. But now they are considering using a more aggressive form of collection for those who don’t pay: private collection agencies also known as PCAs.
We find it ironic that an agency that touts the wonders of public office and their humble servants will readily admit its own shortcomings when it comes to doing anything, much less collecting on the items they are solely responsible for. But all laughter aside, let’s look at what this entails.
In short, anyone who does or cannot pay what the IRS says they must pay get two chances (aka warnings/threats) from the IRS itself before it can call in a private collection agency under the new law. The matter would then be in their hands to use whatever measures they like in order to collect. Even if the measures are unethical or even illegal, it’s difficult to imagine the IRS would be held liable for the agency’s actions.
As it reads now, current federal law allows for the use of private collection agencies for non-tax matters, but the IRS does not use them. It cites “revenue outcomes, taxpayer service and cost effectiveness” as the reasons. The IRS Commissioner went on to tell Congress in 2014 that private collection agencies, “do not provide the same protections to taxpayers from aggressive collection practices and anecdotal evidence suggested some taxpayers were being subjected to aggressive collection practices.”
Said Chuck Schumer, Republican Senator from New York, “This program would create hundreds of jobs in two of the poorest areas in New York, all while increasing federal revenues and not costing a single government job. It draws on past efforts and ensures that lessons learned are applied going forward. We have crafted a plan that has the safeguards necessary to protect taxpayers, the infrastructure to make it work effectively, and the resources it needs to succeed. Both on the merits of the program itself and for jobs in New York, it makes eminent sense.”
In 2009, a similar law was attempted to be passed among the Congress, but it ultimately failed. It began in 2006 and was supposed to save the IRS millions. However, three years and tons of money later, it was scrapped, not to mention the damage done by the IRS sharing the sensitive information of tax payers to agencies all across the nation. Senator Grassley was also a supporter of the measure back then and even asserted that the IRS does not bother to go after amounts owed that are under $25,000 – which I as an expert bookkeeper can say IS NOT TRUE!!!
Said then IRS Commissioner Douglas Shulman on the failed measure, “I believe this work is best done by IRS employees.” Read more about it here.
Several members of Congress are opposing the bill and cite three reasons including jeopardizing due process in order to collect, the possibility of targeting low income tax payers, and the collection of $63.4 million in revenue versus the cost of $67.8 million that stemmed from the 2006 program of the same nature.
Debt collection agencies currently rank fifth out of nearly four thousand industries in most number of complaints, although if government agencies were included, we think the IRS would be competitive with that.
Bookkeeping in Houston, Texas
And if you are in need of expert bookkeeping services to help with taxes and other matters in Houston or the surrounding area, please contact me.