When Congress passed the American Jobs Creation Act of 2004, it agreed to allow the IRS to hire private debt collectors to collect back taxes. Recently, the IRS’s plan to employ two private debt collection agencies has been halted.
What is disturbing about this statute is that it does not provide any remedies to the taxpayer when faced with an abusive debt collector. In the consumer arena, a collector’s behavior is governed by the Fair Debt Collection Practices Act. However, the FDCPA specifically excludes governmental agencies from its provisions. Thus, if a private collector working on behalf of the IRS, gets abusive, there is no federal statute that a consumer may use as a shield and counter-weapon. While it its true that the FDCPA applies only to consumer debts and thus, in a business setting, a collector is not controlled by the FDCPA in the commercial arena, business are usually not as unsophisticated as many consumers are. It may be that in the rush to secure tax dollars that are undoubtedly floating out there, Congress may not have thought this through.