Many people living in Maryland experience difficulty paying their federal taxes. While these individuals and couples may make good-faith efforts to work with the IRS, sometimes these efforts fail. The IRS is permitted to contract with private debt collection companies to pursue delinquent taxpayers.
This practice of using private collection agencies has come under criticism from some quarters. Many have noted that collection agencies don’t have the same standards that the IRS does when it comes to determining whether a debtor has the ability to make payments. As a result, people who would have been given “hardship” status by the IRS are not receiving it from debt collectors.
In addition, the collection agencies aren’t always very effective in actually collecting past due taxes. When the collector fails to obtain funds, the account is sent back to the IRS. This process alone can be a waste of time and labor. While the issue of IRS use of private collection agencies continues to be debated, the fact remains that tax debt is as serious matter. People who fall behind on their obligations risk several consequences, including financial penalties, possible loss of their passports and other collection efforts, such as property liens, bank account levies and payroll garnishment.
People who are concerned about tax delinquencies may benefit from speaking with an experienced tax attorney who can review the client’s case and make recommendations for addressing and managing the tax debt. Depending on the circumstances, the attorney may be able to assist in negotiating a payment plan with the IRS or an offer in compromise, in which the tax debt is settled for less than what is owed.