Results of third party collection efforts for IRS are poor, but program remains
In 2015, Congress charged the Internal Revenue Service with hiring third party collection agencies to collect back taxes from taxpayers. The results have not been impressive.
While a Kaplan Group survey showed that in general, collection agencies are successful in their efforts 17.1 percent of the time, the agencies the IRS spent $20 million on were only able to recoup $6.7 million out of $920 million owed. That’s less than 1 percent.
Oklahoma tax attorney Travis Watkins, who represents taxpayers in such cases, said despite the questionable success rate these programs may be here to stay.
“This failure rate may be enough to put the government off outsourcing collection efforts. In the past, various agencies have tried third party collection agencies with similar results,” he said. “When the programs didn’t prove successful — the return on investment was poor — the programs were abandoned.”
However, that doesn’t mean that the current IRS program will end in a similar fashion.
“The government has had impressive success collecting on defaulted student loans, getting 80 percent on the dollar according to a New York Times report,” Watkins said. “Debt collection companies spent millions on lobbying Congress. That lobbying effort could convince Congress to keep the IRS program going, despite the poor performance numbers.”
However, if the IRS is allowed to take advantage of outside help, so can the taxpayer.
Whether these private firms continue collection activities or not, it is in your best interest to consult professional help if you owe a tax debt, Watkins said.
“The collection agencies may use harassment and other tactics to collect,” he said. “However, the IRS has tools that a private firm does not.”
The IRS can garnish your wages, use all or part of any tax refund to pay off the debt, withhold Social Security checks or seize some types of property.
“Dodging the IRS may prove futile as well, as the government can track you down in ways a private firm cannot. Most importantly, the IRS can do all of this without a court order,” Watkins added.
With the help of a tax lawyer, you can slow down or stop the IRS from seizing property or assets or garnishing wages.
An experienced local attorney has the tools to stop the IRS from taking large sums of a potential tax refund to pay back taxes.
Through working with a tax attorney, you can negotiate with the IRS to reduce taxes owed or work on a settlement or payment plan that you can afford, Watkins explained.
Further, the lawyer can help you avoid mistakes that led to your tax problems through sound advice.
The IRS’s approach to collecting back taxes is likely to result in problems for middle-class, low-income and retirement-aged taxpayers, Watkins said.
“Private collection agencies could cajole ordinary citizens into entering a payment plan that’s more than they can afford while earning a nice commission for themselves,” he said. “We hope that the IRS recommends that Congress abandon the hiring of third parties to collect taxes. However, we recommend that you hire a tax professional to help with back taxes no matter who is doing the collecting.”
IRS problems won’t go away by ignoring them.
“To make matters worse, on-going taxes keep coming at you while you deal with the old taxes. It doesn’t have to be this way,” he said.
“I see these tactics and intimidation in my practice everyday, everyone is entitled to representation against the IRS.”
For more information, call Travis W. Watkins Tax Resolution and Accounting Firm at 800-721-7054 or visit TravisWatkins.com.
This article is sponsored by Travis W. Watkins Tax Resolution and Accounting Firm.