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Congress seeks to revise back tax collection policies

Unpaid tax bills can haunt Americans for years. Currently, the Internal Revenue Service (IRS) deals with tax collection for unpaid bills in a myriad of potentially frustrating ways. However, individuals who fail to pay their taxes on-time may soon have to face an even more frightening debt collection foe than the IRS.

New York Senator Chuck Schumer recently inserted a provision into a large piece of tax legislation that would require the IRS to turn over millions of outstanding tax bills to privately funded debt collectors. A similar program was previously repealed after numerous complaints were filed insisting that private debt collectors were treating debtors in harassing ways.

Under the new provision, all “inactive tax receivables” currently owed to the IRS would be turned over to private debt collectors if the IRS cannot locate any given debtor or make contact with him or her within the course of 12 months. The new measure would affect individuals who have incurred tax debt under the Affordable Care Act and could potentially affect relatives of deceased persons whose death resulted in estate tax debts.

It is worth noting that the nation’s taxpayer advocate has asked the Senate to withdraw the provision. In a letter to lawmakers she notes that, “Outsourcing the collection of federal tax debts is a bad idea. It disproportionately impacts low-income and other vulnerable taxpayers, and despite two attempts [in the past] at making it work, the program has lost money both times, undermining the sole rationale for its existence.”

Source: The Washington Post, “Congress moves to turn back taxes over to debt collectors,” Lori Montgomery, May 15, 2015

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