TIGTA keeping an eye on IRS private debt collectors

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The Treasury Inspector General for Tax Administration has concerns about the Internal Revenue Service’s recently revived private debt collection program in light of the ongoing problem of scammers pretending to be IRS employees calling taxpayers to demand bogus tax debts be paid immediately.

TIGTA Inspector General J. Russell George testified Tuesday during a congressional oversight hearing about how his office is monitoring the rollout of the program, which began last month (see IRS revives private debt collection program). Congress passed legislation in 2015 requiring the IRS to revive a program that outsources some tax debt collection to private companies. The program has been tried twice before in the past but failed to bring in the promised revenue, while prompting complaints of harassment. This time, the IRS has added some extra safeguards, particularly in light of the ongoing scams, out of fear that taxpayers would confuse the scammers with legitimate tax collection agencies.

The four private debt collection companies under contract with the IRS will receive only debts that the IRS has tried to collect in the past, and taxpayers will be alerted by mail that their tax debts have been turned over to private collection agencies, or PCAs. Nevertheless, the new program is already raising some concerns.

“TIGTA initiated an audit soon after the enactment of the legislation to evaluate the IRS’s establishment of policies, procedures and other infrastructure necessary to operate this program, as well as to assess the IRS’s efforts to mitigate risks to the program,” George said in his prepared testimony. “We have identified numerous concerns during our audit, including the IRS’s lack of commitment to assist taxpayers concerned that the PCAs are part of an impersonation scam, as well as our concerns related to the IRS’s process for receiving taxpayer complaints about PCAs. In addition, TIGTA is planning a future audit related to the operations of the program, as well as a review evaluating the PCA contractors’ performance.”

George noted that TIGTA’s Office of Investigations has provided the IRS with insights about how the widespread IRS impersonation scam could affect the Private Debt Collection program. “Specifically, based on what TIGTA learned during its investigation of the impersonation scam, the Office of Investigations provided the IRS with different ways it could consider notifying taxpayers about the program and that their accounts have been assigned to the PCAs,” he said. “In addition, the Office of Investigations has provided integrity and safety briefings to the PCAs’ employees. TIGTA will closely monitor incoming impersonation complaints involving the PCAs, and we will work to take appropriate action and notify the IRS, the PCAs and the public if we identify an impersonation scheme growing within the Private Debt Collection program.”

Law enforcement has been cracking down on the criminals, both in the U.S. and overseas. Last month, U.S authorities arrested at least eight people who were involved in the IRS impersonation scam (see IRS phone scammers busted). Last October, law enforcement authorities in India raided a number of call centers where IRS impersonators telephoned U.S. taxpayers from abroad, arresting dozens of people (see India busts IRS scammers). However, TIGTA is continuing to hear from thousands of people receiving scam calls every week.

“TIGTA has made several arrests in connection with this scam and has numerous investigations underway,” said George. “In July 2015, in one of the largest prosecutions on this scam that we have had to date, an individual pled guilty to organizing an impersonation scam ring. He was sentenced to over 14 years of incarceration and ordered to forfeit $1 million. In October of 2016, after an extensive three-year investigation, TIGTA, the Department of Justice and the Department of Homeland Security announced the indictment of 56 individuals and five call centers located in India. Although the investigations and prosecutions have reduced by over 90 percent the number of scam calls being placed, we are still receiving reports that between 5,000 and 10,000 people are receiving calls each week.”

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