January 26, 2017
IRS Has Hired 4 Large Private Collection Agencies (PCA) That Do NOT Fall Under the Fair Debt Collection Practices Act.
IRS Has Hired 4 Large Private Collection Agencies (PCA) That Do NOT Fall Under the Fair Debt Collection Practices Act.
Since the IRS, and now its Agents, are the most powerful collection agency on the planet, you would think that they fall under the Fair Debt Collection Practices Act (FDCPA) regarding the use of unfair, abusive and misleading collection actions,; however, you would be WRONG. The IRS and any other federal agency collecting its own debt, does not fall under the Fair Debt Collection Practices Act (FDCPA). Instead, those agencies are bound by their own applicable statutes and regulations.
Certainly one would think that the FDCPA’s reasonable and logical limitations on abusive practices should apply to the IRS. Well, they don’t. The IRS—indeed any federal agency collecting its own debts—is exempt from the provisions of FDCPA. Instead, those agencies are bound by their own applicable statutes and regulations.
The IRS Restructuring and Reform Act of 1998 IRC §6304, Fair Tax Collection Practices, which is binding on all IRS employees, brings in some of the provisions of the FDCPA and incorporates them directly into the Internal Revenue Code. The highlights of the sections are as follows:
Communications with a Taxpayer
Without the prior consent of the taxpayer given directly to the Secretary or the express permission of a court of competent jurisdiction, the Secretary may not communicate with a taxpayer in the act of collecting an unpaid tax as follows:
1. At any unusual time or place, or a time or place known, or which should be known, to be inconvenient to the taxpayer. In the absence of knowledge to the contrary, the IRS shall assume that the convenient time for communicating with a taxpayer is after 8 a.m. and before 9 p.m., local time at the taxpayer’s location;
2. If the IRS knows the taxpayer is represented by an individual authorized to practice before the IRS and has knowledge of, or can readily ascertain such person’s name and address, unless that representative fails to respond within a reasonable period of time to a communication from the IRS, or unless that representative consents to direct communication with the taxpayer; or 3. At the taxpayer’s place of employment if the IRS knows or has reason to know the taxpayer’s employer prohibits the taxpayer from receiving communications at work.
Prohibition on Harassment and Abuse
Internal Revenue Code §6304(b) provides that the IRS may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of any unpaid tax.” The non-exclusive list of prohibited actions is as follows:
1. The use or threat of the use of violence or other criminal means to harm the physical person, reputation, or property of any person;
2. The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader;
3. Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with the intent to annoy, abuse, or harass any person at the called number; and
4. Placing telephone calls without meaningful disclosure of the caller’s identity.
IRS Contacts with Third Parties
The IRS is allowed to contact third parties not only to locate a debtor, but to collect the tax. Such third party contact comes in the form of wage and bank levies, but also in the form of summonses for information, documents and records. The IRS routinely summonses banks, investment houses, brokerage firms, mortgage companies, etc., to obtain third party information in both civil audits and criminal investigations. This section prohibits the IRS from contacting any third party in connection with “the determination or collection of any tax” unless the IRS first provides “reasonable notice in advance to the taxpayer that contacts with persons other than the taxpayer may be made.” Section 7602(c)(2) states that the IRS “shall periodically provide to a taxpayer a record of persons contacted by the Secretary with respect to the determination or collection of the tax liability of such taxpayer. Such record shall also be provided upon request of the taxpayer.”
Civil Action for Violations of Law
Internal Revenue Code §7433 allows taxpayers to sue the IRS if “any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregards any provision of this title, or any regulation promulgated under this title” while in the act of collecting taxes.
The victim may recover the lesser of:
1. $1,000,000 in the case of any deliberate reckless or intentional violation of the tax law,
2. $100,000 in the case of mere negligence leading to a violation of the tax law, or
3. The sum of: a) the actual, direct economic damages sustained by the taxpayer as a proximate result of the reckless or intentional or negligent actions of the IRS employee, and, b) the costs of the action.
The Taxpayer Bill of Rights
For further reference and review, I again present the Taxpayer Bill of Rights as set forth in Internal Revenue Code §7803(a)(3).
1. The right to be informed,
2. The right to quality service,
3. The right to pay no more than the correct amount of tax,
4. The right to challenge the position of the IRS and be heard,
5. The right to appeal a decision of the IRS in an independent forum,
6. The right to finality,
7. The right to privacy,
8. The right to confidentiality,
9. The right to retain representation, and
10. The right to a fair and just tax system.
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