Consumer debts stand at $16.5 trillion in the United States, and figures are projected to increase as inflation bites and recession looms. This means that millions of Americans won’t be able to repay their debts, including tax debt, for the next few years.
Thankfully, the Fair Debt Collection Practices Act (FDCPA) prohibits companies and private debt collecting agencies from using improper debt recovery tactics.
What Debts are Covered Under the Fair Debt Collection Practices Act (FDCPA)?
The FDCPA covers debt collections from:
- Collection agencies
- Debt buyers
- Legal firms who regularly collect debts as a practice
- Credits cards
- Medical debt
- Personal debt
Unfortunately, business debts owed to the original creditor are not covered by the FCDCPA.
Does the IRS Have to Follow FDCPA Laws When Collecting Tax Debt?
If you owe back taxes, you may receive a notice from the IRS that a private tax collector (or Private Collection Agency PCA) has been assigned to collect your tax debt.
Importantly, IRS private tax debt collectors must adhere to FDCPA guidelines. These guidelines bar private tax debt collectors from using deceptive means to recover unpaid taxes.
What are Common FDCPA Violations?
Here is what is considered an FDCPA violation per the Fair Debt Collection Practices Act code of conduct:
- Harassment: Any form of harassment, either in person or virtual, by debt collectors is against the law and should be reported. This includes making phone calls to your work or to relatives not listed on debt documents.
- After Hours Visits: FDCPA blocks debt collectors from visiting before 8:00am and after 9:00pm. Any visit during these hours should be reported as harassment and property violations.
- Power of Attorney: If you have an attorney handling your tax debt case, FDCPA laws prohibit private debt collecting agencies from contacting you directly. Your tax attorney handles everything.
When Can an IRS Private Collection Agency Contact You?
An IRS collection agency should only contact you if they need to notify you that they’ve been assigned to collect your tax debt or if legal action is pending. Otherwise, they must stop contacting you per FDCPA laws if you ask them not to contact you again.
How Can an IRS Private Collection Agency Contact You?
Both the IRS and the assigned private tax debt collector initially contact via mail. First, the IRS notifies you about private debt collection. Second, you will receive a letter from the private tax collection agency.
In some cases, they may also reach out to you via the telephone number you registered in your IRS online account or visit your physical residential address. Keep in mind, you can only be contacted between the hours of 8:00am to 9:00pm.
What Can An IRS Private Collection Agency Tell You?
The IRS debt collection agency must inform you of your overdue tax debt, including the creditor (IRS), the amount of back taxes you owe, and your right to dispute the IRS claims.
Any other information, such as the consequences of not paying your tax debt, is not authorized by FDCPA and may be reported as a violation.
How Do I Stop an IRS Private Collection Agency from Contacting Me?
Tax debt collection agencies may take advantage of you if you’re not familiar with FDCPA laws! Know that you have the right to ask the debt collection agency to stop contacting you. If you ask them to stop and they continue to harass you, violations should be reported to FDCPA enforcers.
Can an IRS Private Collection Agency Discuss My Tax Debt with Anyone Else?
The law mandates the IRS and any private debt collection agency keep your tax debt information confidential. They can only discuss it with your spouse (listed on your joint IRS account), your tax attorney (if you have one), and yourself. They can contact other third parties when trying to reach you, but they cannot mention the reason is tax debt.
How Can Wiztax Help?
Call us today at (866) 568-4593 to learn more about how we can help. Alternatively, you can start here to take our free online evaluation. Regardless, we promise to save you thousands in fees.
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