Most Serious Problem: Private Debt Collection (PDC)

The IRS Is Implementing a PDC Program in a Manner That Is Arguably Inconsistent With the Law and That Unnecessarily Burdens Taxpayers, Especially Those Experiencing Economic Hardship

In 2015, Congress enacted legislation requiring the IRS to assign certain tax receivables to private collection agencies (PCAs). Under the law, PCAs are permitted to offer taxpayers installment agreements (IAs) not to exceed five years. The IRS plans to implement the PDC program in ways that are inconsistent with the law and plans to assign to private collection agencies (PCAs) the accounts of taxpayers the IRS itself would not subject to Federal Payment Levy Program (FPLP) levies.

The IRS plans to allow private collection agencies (PCAs) to “monitor” and receive commissions on payments taxpayers make to installment agreements that exceed five years. The IRS intends to assign to PCAs accounts of taxpayers who receive Social Security or Railroad Retirement Board retirement benefits despite having a median income below $19,000.  These taxpayers’ payments are not subject to Federal Payment Levy Program (FPLP) levies if their incomes are less than 250 percent of the federal poverty level. The federal poverty level was about $11,880 for a single person in 2016; 250 percent of that level is about $29,700. The IRS has not provided adequate guidance to PCAs on when they are required to refer a taxpayer to TAS and does not intend to recall accounts from PCAs when the taxpayers request assistance from TAS.

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