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IRS Private Collection Program Targeting Low-Income Taxpayers

Nina Olson, the National Taxpayer Advocate, whose job it is to protect the rights of taxpayers, has come out again opposing the use of private collection agencies (PCAs) to collect on unpaid tax debts. Olson, in a blog post published last week, also said she has directed the Internal Revenue Service to stop placing certain accounts with the four agencies hired to work on behalf of the tax agency.

Olson’s ire is being drawn at a pattern that makes it appear as though the IRS is targeting lower-income individuals with the private collection agency program. About 43% of the individuals who have entered into installment arrangements (IAs) with one of the four private collection agencies hired by the IRS — CBE Group of Cedar Falls, Iowa; Conserve of Fairport, N.Y.; Performant of Livermore, California; and Pioneer of Horseheads, N.Y. — have incomes lower than the allowable living expenses, which is 250% above the federal poverty line. If an individual is unable to make a full payment on the amount outstanding, the four agencies are then instructed to make an installment arrangement with the individual to pay off the debt over a period of time.

The federal poverty line depends on the number of individuals living in a particular household. For example, the federal poverty line for a one-person household is $12,140. For a four-person household, the line is $25,100.

“This pattern of taxpayers whose debts are assigned to PCAs entering into IAs and making payments they appear to be unable to afford is continuing,” Olson wrote last week.

Olson previously blasted the private collection agency program in a report at the end of 2017. She pointed out there that a disproportionate number of low-income individuals were having accounts placed with private collection agencies, but also indicated that the IRS was overspending in relation to the amount of money that was being collected by the private agencies.

In response, Olson said he has directed the IRS to stop placing accounts with the private agencies if the taxpayer’s income was less than 250% of the allowable living expense. The IRS has until the end of June to agree to the plan or to appeal it, Olson said.


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