IRS Turns To 3rd Party Collection Agencies. Now How Do You Tell Whether it is an Imposter or the Real Thing?

From accounting today.com

 "In late 2015, Section 32102 of the Fixing America’s Surface Transportation, or FAST, Act was put into law, requiring the IRS to use private debt collectors for delinquent tax debts."

The IRS tried using private debt collectors two times previously and decided the programs were not cost effective.


"Seven facts you need to know

1. It’s coming soon. The IRS plans to select its authorized private debt collectors in the next two months and then begin using them in early 2017. The IRS will publish the names of these collectors on IRS.gov.
2. Private debt collectors will try to pursue the old, uncollectible accounts. The IRS wants private debt collectors to go after cases the IRS would never pursue – that is, outstanding, inactive receivables. The case criteria for private debt collectors are:

• More than one-third of the 10-year collection statute has expired;
• No IRS employee is assigned to collect the debt; and,
• The IRS hasn’t contacted the taxpayer in a year, and the taxpayer isn’t requesting a payment alternative or relief (such as innocent spouse relief, a collection due process hearing, an offer in compromise, an installment agreement, etc).

Private debt collectors won’t pursue taxpayers younger than 18, those who have been a victim of tax identity theft, or taxpayers in a federally declared disaster area or combat zone.

3. The private debt collectors will try to locate “missing” taxpayers. When the IRS can’t locate taxpayers, it removes them from active collection. In the FAST Act, private debt collectors will pursue those accounts. As the National Taxpayer Advocate has pointed out, the methods these collectors might use to find and collect from these taxpayers could conjure up fears about how the IRS will protect taxpayer rights, information, and privacy.

4. Private debt collectors won’t have enforcement authority. Private debt collectors won’t be able to file liens or issue levies. Keep in mind, however, that the IRS may have already filed a tax lien on some taxpayers before the private debt collector ever calls. Collectors also won’t be able to help taxpayers get liens removed. To address enforcement actions, taxpayers or their advisors will need to contact the IRS directly.

5. Collection alternatives are still available through the IRS. If taxpayers need a payment alternative, such as an installment agreement, currently not collectible status, or an offer in compromise, they should contact the IRS.

6. The IRS will notify taxpayers if a private debt collector is assigned to their case. Before starting the private collection process, the IRS and the collector will send two letters:

• First, the IRS will send a letter notifying the taxpayer that the IRS has assigned their case to a private debt collector.
• Second, after assignment and before contacting the taxpayer, the private debt collector will send a letter.

According to the IRS, these notices will also go to the taxpayer’s representative on file, if any. The IRS hopes that these steps will notify taxpayers of the impending collection and relieve their fears about IRS imposter schemes.

7. Taxpayers experiencing economic hardship aren’t included. Taxpayers who are experiencing severe economic hardship and have an outstanding tax debt can apply for a special status that suspends their obligation to pay (referred to as currently not collectible status). Taxpayers who have negotiated this status with the IRS appear to be excluded from the private debt collection program. The IRS has not finalized this exclusion, but it appears likely that these taxpayers would be treated similarly to those who have requested a payment agreement with the IRS on their outstanding debt.

Third time’s a charm?

Navigating the IRS can be difficult. With imposter schemes running rampant, adding a third-party collector to the mix could add to taxpayer confusion.
According to IRS plans, taxpayers and their advisors should expect two letters to come before a private debt collector calls. And if a legitimate collector calls for payment, taxpayers and their advisors should first consider whether the client qualifies for a payment alternative with the IRS.
Congress hopes that the third private debt collector program will work better than the previous two initiatives. Time will tell, because the third round starts soon."

TWO SMART WORDS FROM ONE SMART GUY

From our friends at Tax Coach.

Marc Andreesen is one of the smarter guys to emerge from the Silicon Valley tech world.  He coauthored Mosaic, which became the first widely-used internet browser. He co-founded Netscape and sold it to AOL for $4.2 billion. He co-founded LoudCloud and sold it to Hewlett-Packard for $1.6 billion. Today he helms the venture capital firm Andreesen Horowitz and sits on the boards of Facebook, eBay, and Hewlett-Packard. He’s even one of just six inductees in the World Wide Web Hall of Fame. (Bet you didn’t even know that was a thing!)

 

So when Marc Andreesen offers some advice, it’s probably worth listening to—even if it doesn’t seem directly relevant to you or your business.

 

Last month, “Four-Hour Work Week” author Tim Ferris sat down to interview Andreesen for his “Tim Ferris Show.” Ferris asked Andreesen what words he would put on a billboard to reach the greatest number of people. Andreesen replied that he’s actually considering hiring a skywriter to put two words in front of every startup in San Francisco.

 

And what are those two words? “Dream big”?  “Cut costs”? “Don’t be evil”? (That’s three words, and Google already claims them.)

 

No, Andreesen’s two words would be familiar to anyone who’s been around TaxCoach long enough. They’re “raise prices.” And I couldn’t agree with him more.

 

Andreesen describes the problem as “too hungry to eat”:

 

“The No. 1 thing—just the theme and we see it everywhere—the No. 1 theme our companies have when they get really struggling is they are not charging enough for their product. It has become absolutely conventional wisdom in Silicon Valley that the way to succeed is to price your product as low as possible under the theory that if it's low-priced everybody can buy it and that's how you get the volume.

 

They don't charge enough for their product to be able to afford the sales and marketing required to actually get anybody to buy it. And so they can't afford to hire the sales rep to go sell the product."

 

If startups can’t sell, they start lowering prices to boost volume. But at that point, says Andreesen, it’s a race to the bottom.

 

“It just makes the problem worse. And so, probably the single number one thing we try to get our companies to do is raise prices,” Andreessen said. “By the way, it's like, ‘Is your product any good if people won't pay more for it?’”

 

Raising prices takes confidence, and that’s a commodity that can be in short supply during times of struggle. But I can tell you that I’ve spoken with easily a hundred TaxCoach members over the years who have raised prices substantially—in many cases, by 25% or more across the board. Not one of them has told me they regret it. (Yes, it’s possible to charge too much. But it’s hard to find someone making that mistake!)

 

So . . . are you just starting a business, and hoping to stand out from the crowd as a premium provider? Raise prices.

 

Are you struggling to take your business to “the next level,” whatever that is? Raise prices.

 

Are you looking to re-invent a mature, successful business to move away from low return items and attract successful customers? Raise prices.