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The IRS is Outsourcing
Posted Tuesday, September 5, 2006 ; 04:14 PM | View Comments | Post Comment
Updated Tuesday, September 5, 2006; 06:02 PM

Got back taxes? Private collection agencies may be calling you.

By Sarah Lieu
Email | Bio | Other Stories by Sarah Lieu

Beginning this week, about 12,500 people across the country who owe taxes to the federal government will be getting phone calls to pay up.

But the calls will be coming from private collection agencies -- not the Internal Revenue Service.

So if you owe less than $25,000 to Uncle Sam, get ready for the Tax Man's backup men.

Jean Cain, is the IRS field representative in the Charleston offfice.

"The only ones that the collection agencies will receive will be ones that are non-disputed. In other words, the people agree they owe the tax."

Uncle Sam says the plan will help the agency recover as much as $336 million during the next decade, and free up agents to catch bigger fish.

But critics argue that privatizing any part of the IRS' role will increase the agency's cost, raise privacy issues and create a potential for fraud. In particular, scam artists posing as private collectors.

However, the IRS says it's prepared.

For starters, you'll receive a letter from the IRS saying you've been selected for the private debt collection program.

You'll then receive a second letter, this time from the collection agency itself.

"It says they've been assigned their account to collect and that they will be contacting them to make payment arrangements in a few weeks." explains Cain.

All checks will still be made payable to the U.S. Treasury, not to an individual or firm.

IRS officials say about 40,000 accounts will be outsourced by the end of the year.

There is one possible kink in the IRS plan. The House passed a budget bill that, if approved by the Senate, could block the IRS from funding the effort.

Related Links:
   - Internal Revenue Service

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