Watch CBS News

IRS To Outsource Legitimate Debt Collection To Private Companies

SAN FRANCISCO (KPIX 5) -- Starting this month, the IRS will start sending taxpayers to collections and that has many concerned about scams and unscrupulous private collection agents.

The IRS tax scam is so successful it reportedly scams hundreds of thousands of people per day.

For years we've been assuring people, the IRS will never call you. If you get a call, it's a scam. Well that advice is about to change thanks to a law passed by Congress in 2015.

It's been the number one complaint to the BBB and regulators for years.

The IRS tax scam: bad guys pretending to be calling from the IRS, demanding immediate payment and making terrifying threats.

But now the IRS has begun outsourcing legitimate debt collection to private companies who may call you, and consumer advocates are concerned.

Suzanne Martindale, an attorney with Consumers Union said, "There is a danger that in the midst of the confusion the consumer could mistake a scam and think that it's a legitimate call from the IRS now that the IRS is also using these phone calls.

The IRS issued a warning this week noting: IRS authorized debt collectors will not: Demand immediate payment, threaten you with arrest or ask for credit card numbers

Still, advocates worry.

Martindale said, "A private collector who's collecting on behalf of the federal government has more powers than if they were collecting on behalf of a bank for a credit card debt for example. They could be operating with relatively unchecked power so there could be legal violations that consumer could be suffering from as a result."

The IRS has contracted with four specific debt collectors and says it's taking steps to ensure they work responsibly.

Performant, located in the Bay Area, has an A+ rating with the BBB, but hundreds of complaints -- including one filed this week -- accusing Performant of "calling and hanging up 5 to 7 times in a row" and demanding a social security number.

The company said it would respond directly to the consumer.

You do have some rights; you shouldn't be harassed over these debts just because it's a government debt.

Federal law does protect from repeated and harassing phone calls, and you can request in writing that a debt collector cease communication.

But when it comes to IRS debt, the agency points out you can avoid the calls all together by logging on IRS.gov and simply paying your balance or setting up a payment plan.

The first few hundred letters will go out this week, with thousands to follow by the end of summer, warning people their IRS debt has been sent to collections.

If you're concerned, or get a call you think is a scam, you can log on to IRS.gov to confirm whether you actually owe money.

The outsourcing is due to a law passed by Congress in 2015 -- not a decision by the IRS.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.