An audit has found that since the start nearly two years ago of an IRS program to turn over certain overdue tax debt to private collection agencies, they have recovered just 2 percent of the balance on those accounts and that taxpayers are not living up to more than half of the repayment arrangements they made with those agencies.
In addition, the collection agencies’ payment calculators “do not calculate interest and penalties accurately,” an IG report said, and one of them encouraged to borrow money from friends and family, “which the law does not appear to allow because the practice involves collecting financial information about persons other than the taxpayer.”
Meanwhile, the IRS’s own reviews “identified various problems, such as mishandling of aged accounts and procedural errors on payment arrangements.”
The IG said that while the customer satisfaction scores of the four collection agencies overall are good, those measures don’t take into account those shortcomings nor what it called “other important aspects of case management, such as returning cases to the IRS when required and the accuracy of payment arrangements.”
The IRS restarted use of private tax debt collection under terms of a 2015 law, which was enacted despite similar problems with prior programs that ultimately were abandoned. Two prior reports from the IG on the current program identified various problems including concerns about the security of personal data on taxpayers.
