Secretary of the Commonwealth William Galvin is concerned that the Massachusetts’ Department of Revenue uses private collection agencies to collect delinquent taxes.
“My office fields many calls from people upset that they have been the target of scam artists posing as tax collectors and demanding money,” Galvin said in a statement. “The government’s use of private collectors muddies the situation in the public’s mind.”
Galvin said he will ask the Department of Revenue to clarify its use of collection agencies and provide the general public with more information about when and how such private agencies are employed.
The Massachusetts Department of Revenue mentions the use of private collection agencies in its FAQ section on the collections process.
It notes, “The commissioner shall not assign the account of any taxpayer to a private collection agency until such taxpayer has been notified. A collection agency employed by the DOR does not have lien or levy powers but will use the same collection techniques used in the regular course of its business.”
“With so many efforts to scam people with threats over tax debts,” said Galvin, “it would be incumbent on the DOR to publicize just when and how a private collection agency becomes involved in the pursuit of delinquent taxes.”
Two weeks ago, the federal Internal Revenue Service announced that it will begin using only four specific private collection agencies to collect unpaid tax debts, many several years old. The program was authorized under a federal law enacted by Congress in December 2015.
The IRS said it will always notify taxpayers before transferring their account to a private collection agency.
The IRS will send a letter to the taxpayer and their tax representative informing them that their account is being assigned to a private collection agency and giving the name and contact information for the agency. This mailing will include a copy of Publication 4518, which outlines what the taxpayer can expect with the assignment.
Once the IRS letter is sent, the designated private collection agency will send its own letter to the taxpayer and their representative confirming the account transfer.
In announcing the program, the IRS warned against scammers and said, “People should remember that these private collection firms will only be calling about a tax debt the person has had – and had been aware of – for years and had been contacted about previously in the past by the IRS.”
According to Galvin, police in India arrested a mastermind suspect earlier this month in a scam operating out of a Mumbai suburb that netted more that $300 million from thousands of American taxpayers. More than 400 people have been charged in that case that involved threats to potential victims if they did not pay taxes or penalties.
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