Reader Comments on the IRS Private Debt Collection Debate

In a story run on insideARM.com Monday (Former Tax Man Says IRS Should Not Use Private Debt Collectors), a former IRS employee is quoted as saying that private collectors working for the IRS can do nothing more than harass taxpayers to collect the money.  And by harass, he meant call them up and demand payment.

We asked insideARM readers what they thought of this.  Naturally, we were flooded with responses.  Below are some of the standouts.

Some readers took a measured approach to their response:

The industry needs to point out to Mr. Schmitz that, if calling a consumer in an attempt to collect a debt is harassment then we need to protect consumers from a multitude of other callers.

I think I’m correct in assuming that the consumer contracted with a provider of goods or services for those goods or services and then upon receipt of same failed to make just payment.  In this case a collector is calling citizens that have failed to honor their responsibilities to pay certain taxes that are allegedly due.  Prior to placing the account with a collector the IRS has made several attempts to collect prior to sending the account to a collector.  The question is, "Did the IRS harass the citizen by calling and requesting payment or even sending a notice?"  Or, as I assume, is there a double standard?

Speaking of harassment, when a collector calls the majority of the time the obligation is rightfully owed and the consumer has perpetrated a breach of contract or agreement.  Therefore, if calls are going out to consumers who have neither breached a contract or agreement and those calls are soliciting some form of payment for some future purchase or service, isn’t this harassment?

There is hardly a night that goes by that my family is not called by an entity seeking to sell, provide, insure or provide a vehicle in which my family can become indebted to them.  Isn’t this an even more insidious form of harassment?  I believe Mr. Schmitz and Congressman Rangel need to adjust their priorities a bit.  There are far more important concerns that need to be addressed by our Senators and Representatives than how professional collectors that are monitored, conducting themselves.  Mr. Schmitz on the other hand is apparently acting out of self-interest and in his position, that’s perfectly fine.

-  John C. Smith, Manager of Human Resources, American Collections Enterprise, Inc.

It would be best if there was some type of competition between the two, because the issue is that the private sector will do a better job recovering the debt.  We have to remember that these people that owe the taxes are basically non-tax payers, the recovery of the debt will make our congress not have to look so hard for funds, which right now is hurting other programs.

We have to do what is best for the tax payers of our country, possibly paying the private agencies the same as they are paying the internal collection staff is the answer, with bonus incentives going to group that recovers more each month, that way the government will not be looking at this as private agencies making huge commissions off of these delinquent debts.

- Director at a mid-sized government-focused collection agency

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Others took a more passionate approach on the politics surrounding the topic:

This is a just another reminder of how brain dead our politicians are!  Charley Rangel is a bleeding heart liberal who would rather see people get off from paying their fair share so as to screen them from being called and “harassed”. I wonder if Charley Rangel has outstanding accounts owed, and is speaking from first hand knowledge? It wouldn’t surprise me. Either way, like I said earlier, just another bungled mess created by bureaucrats who have no idea what is happening in America today.

- Barry Pimentel CEO of Vanbar Management

No matter what, as a tax payer I loose.  So as a tax payer, I would rather loose less.  If the NY democrat wants to have a hearing, let him pay out of his pocket, quit wasting my money.  If the IRS wants to use internal people, let them get paid on straight commission: no collection no paychecks. Compromise: give the internal IRS a time limit.  If they are  so much better they have no excuse for not collecting.  After the time limit (less than a year) send external.

If we would go to the National Sales Tax, we would not have delinquent tax payers, we would not need the IRS altogether which would save the taxpayers billions, illegals would have to pay, as well as people who are citizens of other countries.  What’s not fair about that?  You are enjoying our country, support it.

- Anonymous (actually, the message was signed, “A Taxpayer Sick Of Politics”)

And yes, we even got some responses from those that think outsourcing tax collection to private agencies is a mistake.  Here’s one of them:

There are many problems with private debt collectors, but the main one is that they are not the government and they therefore will not be extended the same image that a call from the IRS generates.  If someone leaves a message on your phone that they are with the IRS, that call will get returned eventually.  Taxpayers will realize that if the debt collector is calling, they need do nothing and they will eventually go away.  I believe the debt collectors are not collecting at all; I believe the taxpayers are paying voluntarily and the government is then paying the collectors.  Think about it…if you knew that the collector could do nothing and you owed the IRS and someone who could do something – say, a credit card company – calls, whom would you pay?

- John O’Neill, Owner of Equity Search, a tax resolution firm.

Thank you to all who wrote in on the topic, and we apologize if your response didn’t make the cut.  If you have anything further to add to the debate, please email editor@insidearm.com or you can discuss it on our message board.