Private Tax Debt Collectors Hired to Track Down Expats

Back in 2015, the US government mandated that the IRS begin passing cold collection cases off to debt collectors. Last week, those contractors were hired and tax information sent out.If you owe money to the IRS, your private tax data is now in the hands of a third party collection agents.

You can now expect harassing calls, emails, and visits from collection agents after October 15, 2016. This is the next tax deadline and it’s common for the Service to launch new programs around this time.

Your collection case will be sent out to a private debt collector if:

1. The IRS is unable to collect or work your case because of a lack of resources or because they can’t locate you or your assets.

1. More than ⅓ of the statute of limitations has passed and no IRS employee has been assigned to your case. The collection statute is 10 years, so this means that about 3.5 years have passed without your case being worked.

1. Your tax matter has been assigned for collections, but more than a year has passed without any interaction. This means you are ignoring their letters and they have not bothered to visit you at home or work.

This development is especially troubling to the expat. The IRS is outsourcing collections to agents who might be willing to make the effort to find you and your assets, where an IRS agent is not. Also, it eliminates the protections afforded by standard IRS operating procedure.

Namely that the IRS will contact you by mail or in person, never by phone. If you’re living abroad, and your assets are protected, there was little chance you’d be harassed. Those days are gone because independent collection agents are allowed to use any and all tools at their disposal.

The reason the IRS doesn’t contact taxpayers by phone is simple: it opens up the collection process to scammers. The IRS could give a damn about bothering you at dinner… they’ve been known to show up at people’s work just to embarrass them. Agents don’t call because it creates more headaches and risks… the costs greatly outweigh the benefits.

Private debt collectors are not required to follow this precedent. They can call you at all hours of the day and night and harass the hell out of you. And you can expect the scammers to be following closely behind.

For years the IRS has warned of debt collection scams. Just last week (October 6, 2016), the US shutdown a call center in India that managed to scam taxpayers out of $47 million.

The week before, a student was conned into putting $1,762 on iTunes cards to pay IRS. The “collection agent” kept calling and calling until the student gave up and gave in. For more on the story, see ABC News.

You’ll find these phone scams all over the IRS and FTC sites. Allowing private debt collectors to skirt the procedures in place will only embolden the scammers.

Considering the above, and the new passport rules, expats with tax debts or unfiled returns are big time targets of the IRS. If you are at risk, you need to take action immediately. You should also spend the time to understand your rights (see below).

• New this year is the IRS’s ability to revoke or block the renewal of your United States passport.

• For my original post, see Warning: The IRS can Revoke Your Passport

If you decide to cave to the pressure from these private debt collectors, note that they cannot accept payments. Any money you pay must always go directly to the IRS. Anyone asking you send money to them to be applied to your IRS account is a scammer.

I’ll conclude by noting that the Fair Debt Collection Practices Act applies to these private debt collectors hired by the IRS. You have the same rights and protections against these collectors as you do against someone harassing you for any other type of personal debt.

For more on these rights, you might start with the Federal Trade Commission page on debt collection. For a list of illegal debt collection practices, checkout Nolo on Debt.

I hope you’ve found this post on IRS debt collectors to be helpful. For more on how to protect your assets abroad, please contact me at info@premieroffshore.com for a confidential consultation.