Sen. Elizabeth Warren, D-Mass., and three other Senate Democrats are asking the Federal Trade Commission for a government review of the private companies that have been contracted by the Internal Revenue Service to help collect overdue tax debts.

Warren, along with Sen. Cory Booker, D-N.J., Benjamin Cardin, D-Md., and Sherrod Brown, D-Ohio, wrote a letter Monday to the leaders of the Federal Trade Commission asking for a Fair Debt Collection Practices Act review of the call scripts used by four private debt collection companies hired by the IRS, attaching the scripts used by employees when calling taxpayers about their tax debts.

“In order to ensure that taxpayer rights are duly protected at each stage of interaction with the IRS and its private contractors, I believe the call scripts used by IRS contractors deserve review by the FTC,” Warren and the other senators wrote. “I am particularly concerned that these call scripts may include implied threats to taxpayers, violations of taxpayer privacy protections due to information shared with third parties, and inadequate responses to taxpayer cease and desist requests.”

Senator Elizabeth Warren
Senator Elizabeth Warren Zach Gibson/Bloomberg

The PATH Act of 2015 included a provision requiring the IRS to hire private debt collection agencies, even though the IRS has twice before discontinued such programs after finding that the private companies failed to collect as much tax revenue as originally envisioned and after hearing complaints of taxpayer harassment. But after Congress required it to give the private debt collection program another try, the IRS selected four private contractors last September: Pioneer Credit Recovery, CBE Group, Conserve and Performant, to collect these tax debts (see IRS picks private debt collection contractors). In April, the IRS began assigning accounts to Pioneer (see IRS revives private debt collection program).

Warren and some of the same senators sent a letter last month to Pioneer after receiving complaints that some of its employees encouraged people to use money from their 401(k) retirement funds or take out a second mortgage to pay off their tax debts (see Senators concerned about IRS private debt collector abuse). In the new letter, Warren and the other lawmakers asked the FTC to review the call scripts used by all four debt collection agencies and to answer several questions, including whether the FTC is actively monitoring complaints against the four contractors hired by the IRS to collect tax debts, whether the FTC has received any such complaints and what the nature of them is.

Pioneer's call script, posted by The New York Times, includes questions such as "Is it possible to pay your balance in full within 30 days," followed by suggestions on where taxpayers can get the money, such as borrowing against their 401(k) or taking out a loan from a credit union.

The National Treasury Employees Union, which represents IRS workers, supported the senators’ call for an FTC investigation of the contractors. It pointed out that the companies collect a commission of up to 25 percent and argued that the private debt collection program opens new doors for scammers to impersonate IRS personnel, disproportionately targets low-income taxpayers, and exposes taxpayers’ private data.

“This is a job for the dedicated, professional civil servants of the IRS because—unlike private contractors—they are specially trained to help bring taxpayers into compliance with compassion and fairness,” said NTEU national president Tony Reardon in a statement. “We are glad that some in Congress are aware of the harm that can come from privatizing certain government functions, and we believe Congress will once again abandon this bad idea.”

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.