The IRS Stops Collecting Taxes

Posted on 23. Aug, 2006 by in News, Taxes

irs_collection.gifIt’s not uncommon for large businesses to outsource those pesky and annoying tasks like payroll or billing, but due to either a lack of staff or laziness (or both) even Uncle Sam has begun to outsource. However, the irony is that the IRS is the agency that will soon begin outsourcing its main job – collecting taxes – to someone else! The story seems a bit too bizarre to be real but trust me when I say that sadly, it’s true.

The IRS will assign delinquent federal tax accounts to three PCAs (Private Collection Agencies) beginning Sept. 7. An initial 12,500 taxpayers who owe back taxes will be in this group, with the number reaching approximately 40,000 by year’s end. So to get this straight, the IRS knows who owes taxes, how much they owe, and where they live, but they just don’t have the resources to do it? But the real kicker is that by outsourcing the collection process the private debt collection program is expected to bring in $1.4 billion over 10 years, with the collection agencies keeping about $330 million of that, or 22 to 24 cents on the dollar!

Now not only does this plan seem ridiculous, but it’s going to place everyone who pays taxes into a huge security hole. What am I talking about? Phishing. Now that private companies are involved in the collection of taxes, you can guarantee that you will start to get emails from phishers who are going to try to tell you that you owe back taxes and that by “clicking on this link” you’ll be able to pay those back taxes. Although the readers here are far too intelligent to be caught up in a phishing scam, there will be countless others who get caught up in this scheme.

So not only is the IRS going forward with these ridiculous plans to outsource tax collection to private collection agencies but they’re putting us all at risk of identity theft. Thanks guys!

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