Debt Servitude: IRS’ Private Debt Collectors Are Crushing Poor American Taxpayers

by | Jun 14, 2018 | Headline News | 39 comments

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    This report was originally published by Tyler Durden at Zero Hedge

    Since the IRS implemented the private debt collection (PDC) initiative in 2017, National Taxpayer Advocate Nina Olson warned that low-income taxpayers whose debts are assigned to private collection agencies (PCAs) are being locked into debt servicing installment plans they cannot afford, as many are unable to cover basic living expenses.

    That was the conclusion reached by Olson in a June 6 report, who documented that 43 percent of taxpayers assigned to PCAs via the IRS had an income lower than their allowable living expenses.

    “I have been concerned that taxpayers whose debts are assigned to private collection agencies will make payments even when they are likely in economic hardship – that is, they are unable to pay their basic living expenses,” she wrote in a blog. “This is exactly what has been happening.”

    According to the Government Executive, the IRS’ private debt collection program has recently restarted, after the program closed several times because it failed to bring in an adequate amount of recovered taxes.

    Here are the four private companies participating in the program: CBE Group of Cedar Falls, Iowa; Conserve of Fairport, N.Y.; Performant of Livermore, California; and Pioneer of Horseheads, N.Y.

    Olson has long scrutinized the private debt collection program, which she suggested in her January annual report to Congress that the program has had a series of complaints about harassing low-income taxpayers.

    Her office, the Taxpayer Advocacy Service, analyzed tax returns of approximately 4,100 taxpayers who made debt servicing payments to the IRS after their debts were assigned to PCAs through September 2017.

    Here is what the Taxpayer Advocacy Service discovered: 

    • 28 percent had incomes below $20,000;
    • 19 percent had incomes below the federal poverty level; and
    • 44 percent had incomes below 250 percent of the federal poverty level.

    The Government Executive specifies that “debt-ridden low-income taxpayers are asked to pay all of what they owe, but have the option of entering into—without submitting financial information—installment agreements up to seven years.”

    “This pattern of taxpayers whose debts are assigned to (private collection agencies) entering into (installment agreements) and making payments they appear to be unable to afford is continuing,” Olson warned in a blog last week.

    Olson’s research team studied the financial circumstances of 2,102 taxpayers’ ability to meet their “allowable living expenses,” between April 2017 (when the IRS started assigning tax debts to PCAs) and September 2017.

    IRS data from April 2017 through March 29, 2018, of 9,751 taxpayers who entered into installment agreements and made payments while their debts were assigned to PCAs indicated:

    • 24 percent had incomes below the federal poverty level – all of these taxpayers’ incomes were less than their allowable living expenses;
    • 22 percent had incomes at or above the federal poverty level and below 250 percent of the federal poverty level; 80 percent of these taxpayers’ incomes were less than their allowable living expenses; and
    • Overall, 43 percent who entered into installment agreements had incomes less than their allowable living expenses.

    On April 23, 2018, Olson issued a Taxpayer Advocate Directive (TAD) requesting the IRS to stop assigning PCAs any more new debt of taxpayers whose income was less than 250 percent of the federal poverty level. Olson said, “I ordered the IRS to respond to the TAD, either by agreeing or by appealing the TAD to the Deputy Director for Services and Enforcement by June 25, 2018.”

    “And now we learn that it is adding more financial hardship on American families already struggling to keep up with their bills,” NTEU national president Tony Reardon said in a statement Friday. “This is the third time Congress has steered public IRS business to private collection agents, and like the first two times, it should be canceled.”

    Democrats in the Senate and House, among them Sen. Ben Cardin, D-Md., and Rep. John Lewis, D-Ga., have recently introduced a bill that would discontinue the PCAs program:

    “We cannot continue to waste money using private collection agencies to collect tax debt,” said Cardin, who serves on the Senate Finance, Taxation and IRS Oversight Subcommittee. “Putting a bullseye on the back of low-income taxpayers has lost taxpayer dollars every time it has been tried. It needs to stop for good.”

    Collecting debt is a nasty business which is why the IRS turned it over to the private sector. The result, well, these debt collectors are crushing low-income America with installment payments stretching out as far as seven years. Many cannot afford basic living expenses, therefore, stripping them of the power to consume, which is transforming low-income America into more debt servitude. Crushing the poor and middle class is not how America will be made great again.


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      1. Just the beginning folks.

        • Abolishing the irs and killing scum debt collectors sounds like a start.

          • Menzo, I think we’ll be forced into that.

          • research folks….the income tax is not legal….we’ve been duped…..

            • Yes viper, for a very long time now. I’m tired of giving my living to a bunch of no good slime.

        • FYI…

          * A lot of those “under $20,000” folks are quite well-off, and stuff money into tax shelters (trusts, foundations, LLCs, Chapter S Corps, whatever) so they can get that sweet lower corporate/non-profit tax rate and all the tasty loopholes that come with it.

          * If the debt is sold to a private collection agency, it could suddenly become a private debt, and can age-out under Statute of Limitations for private debt (usually 7 years, but it depends on which state you live in.) Not sure though – check with a tax lawyer to be certain (most have free initial consultations).

          * Even the IRS has to abide by the Fair Debt Collection Practices Act. If you think you’re on the wrong end of a blood-sucking collection agency, look up the FDCPA, read it, learn it, know it.

          * If you absolutely cannot pay your debt, talk to a bankruptcy attorney. They all have a free initial consultation, so it costs you nothing to find out if that’s the best route to go, and if you can discharge all your other debts (if nothing else, to make it easier to pay the taxman if you have no other choice and cannot get it discharged through bankruptcy.) Note that you don’t necessarily need to pay a lawyer to do it – you can file and chase it yourself (just be sure to pay the –nominal– filing fees.)

          Lots of options I don’t have the space to mention, but the point is that you have to learn how to use the system against itself, and they (fortunately) left a lot of tools out there to help you do it.

      2. Reminds me of what’s been happening in Greece…

        In the old days, if some company made a bad investment, it was just written off as bad move by the company and they lost their money… Nowadays, the top bracket (super rich, corrupt, greedy pigs) can enslave you, steal public assets (which is NOT the politician’s to give away!!).. but they can give that to the greedy bastards for “payment”… BASICALLY, take everything but the clothes off your back…


          • Eisen;
            I’m beginning to think you are the voice of reason here.

          • Eisen, I have a different view.

            All the loans in Christendom to Greece will not solve the debt crisis. The design of the Euro was seriously flawed. They implemented only a single currency and left all member states with their national debts instead of consolidating them. This was major stupidity by the politicians.

            Then the Euro rose from 80 cents to $1.60 and suddenly Southern Europe saw their national debts double in real value. It was no different from borrowing to buy a home in Swiss franc to save interest and watching the Swiss double in value and now you owed twice as much on your home. Debt relief of 50% is needed on the entire national debt – not just the loans since 2010.

            The two countries who are serial defaulters in Europe are France and Spain. The Spanish sovereign defaults took place, turning the country into a serial defaulter beginning in 1557 followed by 1570, 1575, 1596, 1607, and 1647 ending in a 3rd world status. Greece holds the record for the greatest duration of default by its government: it has been in default for about 50% of its modern history. Portugal also defaulted during the mid-sixteenth century. Other European states followed in the seventeenth century, including Prussia in 1683, though France and Spain remained the leading defaulters with a total of eight defaults and six defaults, respectively. Following Greek independence in 1829, Greece spent around half its time in default on its sovereign debt.

            Greece is the current deadbeat and has defaulted on its external sovereign debt obligations at least five previous times in the modern era (1826, 1843, 1860, 1894 and 1932). The first episode occurred in the early days of that country’s war of independence, and the last default was during the Great Depression in the early 1930s. The combined length under which Greece was in default during the modern era totaled 90 years, or approximately 50% of the total period that the country has been independent. This is why the Greeks tend not to pay taxes as a national sport for they also know they cannot trust government by experience.

            Although many might consider this level of default to be excessive, Greece is nowhere close to the top of the list globally. Venezuela and Ecuador, with 10 defaults each in modern time, share the honor of being the greatest serial defaulters of the modern era. Yet stupidity is a virtue among bondholders for they always go back for more.

            But the bottom line it is the politicians in control of this debt that bankrupt these countries and create this continuous cycle of decay. The people are not lazy! It is the free$hiter politicians who keep offering idiotic benefits in order to get control of government, to print the debt and line their pockets!!!

            The same thing is happening in America. The bureau of labor statistics in the May report says almost 95,000,000 people of working age in America are not working? So does that mean we are like the F’in lazy …. NO it means the socialist politicians have destroyed most of Americas manufacturing and shipped it to third world countries!! These SOB politicians are taxing small business out of existence around the world and offering the public fancy benefits to keep power, to print debt and line their pockets!!!!

      3. Those PCA’s are parasites just like the predatory lenders. No PCA would want to ever deal with me if they know what’s best for them.

      4. Yep, they plan to do to us what they did to Greece.

      5. Anonymous, NOBODY is taking anything from me if they want to live.

        • Brave, Everyone has a plan until they get punched in the mouth or shot in the face.

          • Anonymous, someone has to get close enough to do one or the other to me and that’s NOT happening.

            • Get this……I’m 30 minutes from fairport,ny…..lmao



      6. Aren’t they required to have a legal/court judgement against the debtor in order to enforce this installment plan?

      7. The irs is owned by the Rothschild private illegal counterfeit printing money scam scum.

        We fought the American Revolution to free ourselves from his bankers and their taxation “without representation” which is what we have now.

        If Washington and Jefferson, and the rest of the rebellious would have lost the battle against crazy King George and his poo ish central bankers; Washington would have been hung as a traitor to the crown and the bankers would have arrived to enslave us in 1776 instead of 1913.


        • You are so correct. IT would be good if everybody who visits this blog did research on the Rothschild family and all they have done to take over the currency of all nations. They have been working at this for over 200 years.

      8. This article makes no sense. People that poor don’t pay any income task. The get earned income credit. Free money distributed from taxpayers to them.

        So the only reason the IRS would have something to collect is if these parasites defrauded the taxpayers with falsified claims and received refundable tax credits they were not entitled to receive. Terminate the unethical earned income tax credit and this problem goes away.

        • I wish they would just calll it what it really is, UNearned income credit, because they certainly didn’t earn it.

          But what I wish for even more is for Americans to wake up and take a stand against the tyranny.

      9. When you are represented by quality legal counsel and tax accountants, the level of respect you get is much higher from IRS and private collectors. If you’re by yourself which most of us are, you’re dirt!

      10. If they defaulted on a bank loan, that bank can submit it to the IRS as income and they will issue it out to the tax payer as unclaimed income and now they will have a tax penalty on it. If they had received earned income or other benefits, this extra “income” was not listed and they may owe back money from that as well. The bank loan default as income was a change about 3 or 4 years ago.

      11. Years ago, after my mother died while still owing on a credit card, one of those lowlifes called me demanding that I pay her bill. I told him that I didn’t have anything for him. I listened to his hollering and cursing for a bit. Then I calmly told him that my mother had left no assets whatsoever, that the credit card was unsecured debt, and finally that I was not obligated under NC law to give him crap. Then he really let fly.

        I hung up on him.

        • I had something similar happen to me once.
          I asked for their physical address so I could pay them in person, in cash, and get a receipt. They hung up.

          • Why not just give them the address of the cemetery

      12. Archivist and Rellik, be very careful. There are some scams like that out there these days. Every time I get a strange name and/or number on my caller ID, I just let it ring until it stops and then I block out the number so they can’t call me from that same number again. No one has any obligation to talk to any scammers. As long as it’s your phone and you pay the bill you make your own decisions about who to talk to.

        • DB,
          Someone tried to pull a scam on my wife.
          I found his IP and location
          within minutes, dip wad was on a cell phone.
          He was trying to play like a Microsoft
          guy and take over her computer.
          I countered and wanted to take over his to
          send him what he wanted.
          Over the phone he complained.
          We have had no problems from them since then.
          Lord only knows how many people they scammed.
          If something is wrong you will get a physical
          letter, delivered by a government agent.
          Anything else is a scam.

        • What bugs me is that the scammers are now spoofing their caller ids. I got one call where the caller id said that they were calling from a local high school. They’re using random numbers in your own exchange so you’ll think it’s a friend that you don’t know the number of.

          I let the answering machine take almost all my calls now.

      13. You can’t squeeze blood money out of a broke turnip.

      14. Never been rich and never owed the IRS. Pay your taxes. Pretty simple. If you are poor you get it all back net year. Why would these people owe money? Cherry-picking article playing on emotion.

      15. If you give anything or support this criminal treasonous United States CORPORATION Government from the bowels of hell in Washington DC in ANY WAY then you are nothing but a soulless coward, and you get to spend eternity in hell with the psychopath monsters from the bowels of hell you worship as Gods!!!

        • UNITED STATES isn’t even an American corporation! IRS$ goes to the Federal Reserve (not American either) and doesn’t get applied to infrastructure. check out Paul Stramer Lincoln and Anna Von Reitz.

      16. “the program closed several times”
        “cannot continue to waste money”

        There’s not a literal budget; it was hypothecated out of thin air, without consideration.

        So were your job duties.

        You are paying people to do fake makework, in an imaginary unit of measure.

        The only reason this still exists, and will continue to exist, is because most people have no independent value system.

        I would say, in much the same proportion as drone, worker bees to queens.

      17. The goal in handling taxes should be to not get a return and not to pay in except for unplanned income. A large tax return means poor planning with the government having some of your money interest-free for part of a year. I’ve seen too many people treat a tax return as great news and free money when it is really a sign that you need to plan better. I’m getting to be a grouchy old man but it irritates the hell out of me!

      18. America Freedom To Fascism Documentary

        There is NO LAW Americans living in the US requiring citizens to file with the IRS


        When the people fear the government there is Tyranny,
        When the governmemnt fears the people there is Liberty!!!

      19. YouTube:
        America Freedom To Fascism Documentary

        There is NO LAW Americans living in the US requiring citizens to file with the IRS


        When the people fear the government there is Tyranny,
        When the governmemnt fears the people there is Liberty!!!


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