New York Times Article Criticizes Tactics of Private IRS Debt Collectors

On Friday the New York Times published an article criticizing the collection efforts of Pioneer Credit Recovery (Pioneer) on behalf of the Internal Revenue Service (IRS) in connection with the collection of delinquent tax debts. 

The genesis of the article was a letter authored by four United States Senators (Democrats Elizabeth Warren, Sherrod Brown, Jeff Merkley and Benjamin L. Cardin), addressed to Pioneer, the IRS and the Treasury Department. The Senators accuse Pioneer of acting in “clear violation” of the tax code. A copy of the letter was provided to the New York Times. 

Per the Times article:

“In particular, they object to Pioneer’s “extraordinarily dangerous” suggestion that debtors use 401(k) funds, home loans and credit cards to pay off their overdue taxes. 

Pioneer is unique among I.R.S. contractors in pressuring taxpayers to use financial products that could dramatically increase expenses, or cause them to lose their homes or give up their retirement security,” the senators wrote. “No other debt collector makes these demands.” 

While the article focused on Pioneer tactics, the Times also took aim at the other three private contractors:

“All four of the collection companies hired by the I.R.S. — CBE Group, ConServe, Performant Recovery and Pioneer — tell debtors that they can set up an installment plan lasting as long as seven years, two years longer than the span that private collectors are legally allowed to offer. The code that authorizes the IRS to hire outside collectors says that they may offer taxpayers installment agreements that cover “a period not to exceed five years.”

The IRS said that payment plans lasting longer than five years were legal as long as they were approved by the agency.”

insideARM Perspective

insideARM recommends that its readers go through the entire New York Times article, as it also includes some defense of the program by an IRS official.

The use of private contractors by the IRS has been political and controversial. It will continue to be political and controversial. It is likely that there will be similar articles written in the future. The four private companies will continue to be under extreme scrutiny.  Complaints will be monitored and magnified by interested parties looking to kill the program.