[et_pb_section admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_text admin_label=”IRS Private Debt Collectors Accused Of Pressuring Taxpayers, Breaking The Law” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

IRS Private Debt Collectors Accused Of Pressuring Taxpayers, Breaking The Law

[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”1_2″][et_pb_text admin_label=”Fact: There’s a new law in effect where the Internal Revenue Service now can pass along unpaid tax bills to private debt collectors. If you know anything about debt collection at all, you can get a sense for just how problematic this new law may be. In fact, according to Forbes, many U.S. senators have already come on record regarding the way that these debt collectors are handling certain taxpayer accounts. Specifically, Pioneer Credit Recovery has been among those that have been targeted by the concerned senators. ” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Fact: There’s a new law in effect where the Internal Revenue Service now can pass along unpaid tax bills to private debt collectors.

If you know anything about debt collection at all, you can get a sense for just how problematic this new law may be. In fact, according to Forbes, many U.S. senators have already come on record regarding the way that these debt collectors are handling certain taxpayer accounts. Specifically, Pioneer Credit Recovery has been among those that have been targeted by the concerned senators.

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[/et_pb_image][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Issues with IRS Private Debt Collectors” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Issues with IRS Private Debt Collectors

[/et_pb_text][et_pb_text admin_label=”So just what are some of the major” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

So just what are some of the major issues when it comes to IRS private debt collectors? Forbes states that in their letter regarding Pioneer Credit Recovery, Sens. Sherrod Brown (D-OH), Benjamin Cardin (D-MD), Jeff Merkley (D-OR) and Elizabeth Warren (D-MA) have found the issues to be four-fold:

  • Concerns about properly protecting U.S. taxpayers from criminal debt collectors posing as IRS agents.
  • Pressuring taxpayers into illegal, illogical or complicated payment plans or transactions.
  • Violation of the Fair Debt Collection Practices Act.
  • Violation of IRS protocol and guidelines.

While all of the aforementioned issues are of grave concern, the one that the senators have found to be most alarming thus far is the potential violation of the Fair Debt Collection Practices Act. This is largely because of Pioneer’s short lapse in collection attempts regarding letters sent to verify debt and confirm debt collector legitimacy. Pioneer’s short five-day window has the potential to allow scammers to swoop in and capitalize.

[/et_pb_text][et_pb_text admin_label=”Additionally, Forbes reports that there are also major concerns about how much taxpayers are being pressured into settling debts or moving around assets to compensate for their unpaid debts, notably among low-income taxpayers. Under the Federal Trade Commission’s Fair Debt Collection Practices Act, it’s illegal for a debt collector to use any sort of threat, abusive language or unfair or deceptive practices when it comes to collecting debt. However, after looking into the call scripts of Pioneer, the senators have found concerns regarding the collector’s ability to stay within these set confines. ” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Additionally, Forbes reports that there are also major concerns about how much taxpayers are being pressured into settling debts or moving around assets to compensate for their unpaid debts, notably among low-income taxpayers. Under the Federal Trade Commission’s Fair Debt Collection Practices Act, it’s illegal for a debt collector to use any sort of threat, abusive language or unfair or deceptive practices when it comes to collecting debt. However, after looking into the call scripts of Pioneer, the senators have found concerns regarding the collector’s ability to stay within these set confines.

[/et_pb_text][et_pb_text admin_label=”It’s worth noting that in response to the senators’ letter and concerns about possible illegal collection practices, Pioneer has responded defending its integrity and claiming that all of its collections practices fall within legal lines. Forbes states that Pioneer is just one of four agencies that the IRS authorizes to collect debt on its behalf. The other three are CBE, ConServe and Performant.” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

It’s worth noting that in response to the senators’ letter and concerns about possible illegal collection practices, Pioneer has responded defending its integrity and claiming that all of its collections practices fall within legal lines. Forbes states that Pioneer is just one of four agencies that the IRS authorizes to collect debt on its behalf. The other three are CBE, ConServe and Performant.

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Separating Scam from Legit: What You Need to Know

[/et_pb_text][et_pb_text admin_label=”You’ll get an IRS letter if your tax account has been passed to a debt collector. Private debt collection agencies still must abide by the Fair Debt Collection Practices Act. All payments must go to the IRS – not to any debt collection agency (or those posing to be a debt collection agency). Debt agencies are unable to place tax liens or issue any sort of a levy against taxpayers. ” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

  • You’ll get an IRS letter if your tax account has been passed to a debt collector.
  • Private debt collection agencies still must abide by the Fair Debt Collection Practices Act.
  • All payments must go to the IRS – not to any debt collection agency (or those posing to be a debt collection agency).
  • Debt agencies are unable to place tax liens or issue any sort of a levy against taxpayers.

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Many elderly Americans scammed with Hundreds of thousands of Americans have received phone calls from people purporting to be either debt collectors or police pursuing delinquent debt. The callers contact people at work and at home. Many calls come in the middle of the night. The victims are threatened with harassment or imprisonment. The scammers have collected at least $5 million from people who did not owe them money.

These scams are persuasive because the callers usually have a great deal of personal information about the victims. They often know when a loan was made, the loan amount and other details. Because of the amount of information they have and in an effort to avoid trouble, many people pay up.

Phantom debt is debt that is old, defaulted, paid or otherwise not owed by the debtor. While phantom debt can sometimes appear on credit reports as an error, the current case involves individuals deliberately trying to collect money that is no longer owed.

The Federal Trade Commission has frozen the bank accounts of Kirit Patel, a front man who set up the California company behind the scam. The FTC and the state of Illinois are suing six companies and three people who have used a number of business names in the scam, including Stark Recovery, Stark Law and Capital Harris Miller and Associates. While the calls originate in India, the scam is supported by the participation of people in the U.S. American corporations are set up to collect the information that is used when calling the alleged debtors.

This is not the first case of widespread phantom debt fraud. In November 2015, the FTC reported on a company called Delaware Solutions or Clear Credit Solutions that allegedly purchased payday loan debts. The debts were not valid, but, the company proceeded to call and harass people to intimidate them into paying.

What should you do if you are contacted about phantom debt?

There are a number of laws that protect people from unfair pursuit of debts. Knowing your legal rights can help protect you against scammers. If someone contacts you about a debt that you do not think you owe:

  • Ask for a validation notice. This is a document that confirms, in writing, how much you owe and what the debt is for. By law, it must be sent to you within five days of contacting you.
  • Remember that it is illegal for a debt collector to threaten or harass you.
  • Know that a debt collector cannot put you in jail.
  • Know that you can tell a debt collector must, if you ask, only contact you in writing.
  • If a debt collector does not validate a debt or threatens or harasses you, report them to the FTC and your state’s Attorney General’s office.

Knowledge of your rights can help protect you and preserve your good credit. Do you need help improving your credit score and erasing phantom debt? Contact Key Credit Repair today.

statute of limitations

Statute of Limitations on Debt Collection – Power Advice

Statute of Limitations on Debt Collection: In an effort to control debt resolution duration, the court system created and enacted statute of limitations codes. The statute of limitations on old debt indicates the amount of time, in years, that creditors have to file a claim for money owed on the account. Court officials in each jurisdiction assigned a particular length of time for debts owed in that area. Once the debt ages past the indicated limitations, the creditor cannot pursue payment through the court system. Understanding the history of the statute of limitations on debt along with current regulation standards can help debtors handle their debts appropriately.

History of Debt Limitations

Modern statutes regarding debt collection come from ancient Roman laws, including the Twelve Tables. The laws started to ease disputes regarding oral debt contracts that were tying up the court system and delaying proceedings regarding criminal matters. This system worked well for the Roman perception of property ownership and debt creation.

English interpretation of Roman laws changed the definition of ownership to rely less on possession and more on contractual exchange between individuals. As a result, written contracts became the preferred way to handle business between two or more parties. The value placed on each type of contract varies from state to state, resulting in differing laws for each modern jurisdiction.

Current Regulations

Without a time limit on old debt retrieval actions, creditors pass their clients’ accounts from collection agency to collection agency without an end in sight. All of those agencies file collection requests with the court, which often jams up the system, especially in busy jurisdictions.

Each state developed their own code system with a certain number of years for oral and written contracts. With the exception of open accounts, the time limit starts counting down the moment the debtor defaults on the account. The debt timer countdown restarts each time debtors make a payment on the account, however.

Most debt limits range from three to seven years, with several states on the extreme side of the spectrum. For example, Kentucky enables creditors to pursue written contracts for fifteen years. On the other side, oral contracts in California must be resolved within two years or the debt is forgiven at the end of that time span.

States have the right to revisit the assigned statute of limitations on debt any time. Landmark court cases, in particular, have the power to influence state-level change of the debt laws. Unless the laws infringe on citizen rights, however, lawmakers do not usually challenge the code as it is written.

Statute of Limitations for Each State (in number of years)

State Oral Written Promissory Open-ended Accounts
AL 6 6 6 3
AR 5 5 5 3
AK 6 6 3 3
AZ 3 6 6 3
CA 2 4 4 4
CO 6 6 6 3
CT 3 6 6 6
DE 3 3 3 4
DC 3 3 3 3
FL 4 5 5 4
GA 4 6 6 4**
HI 6 6 6 6
IA 5 10 5 5
ID 4 5 5 4
IL 5 10 10 5 or 10***
IN 6 10 10 6
KS 3 5 5 3
KY 5 15 15 5
LA 10 10 10 3
ME 6 6 6 6
MD 3 3 6 3
MA 6 6 6 6
MI 6 6 6 6
MN 6 6 6 6
MO 5 10 10 5
MS 3 3 3 3
MT 3 8 8 5
NC 3 3 5 4
ND 6 6 6 6
NE 4 5 5 4
NH 3 3 6 3
NJ 6 6 6 6
NM 4 6 6 4
NV 4 6 3 4
NY 6 6 6 6
OH 6 15 15 6
OK 3 5 5 3
OR 6 6 6 6
PA 4 6 4 6
RI 10 10 6 4
SC 3 3 3 3
SD 6 6 6 6
TN 6 4 6 6
TX 4 4 4 4
UT 4 6 6 4
VA 3 6 6 3
VT 6 6 5 4
WA 3 6 6 3
WI 6 6 10 6
WV 5 15 6 4
WY 8 10 10 8

 

** Georgia Court of Appeals came out with a decision on January 24, 2008 in Hill v. American Express that in Georgia the statute of limitations on a credit card is six years after the amount becomes due and payable.

*** An Illinois appeals court ruled on May 20, 2009, that the statute of limitations on a credit card debt without a written contract was 5 years.

**** State law doesn’t specify the limitations on open accounts.

Source: bankrate.com

Responsibility Of Debtors

While the debt sits within the given time limit, debtors have the responsibility to pay it as instructed. The payment schedule is either spelled out in the written contract or hashed out verbally between the debtor and creditor representative. Defaulting on the account can result in collection actions, including a court judgment and issue of wage garnishment actions.

Once the debt passes the given limitation time, debtors do not have the obligation to pay the debt. Making a payment on the account will reset the time limit to the date the payment was received, however. Creditors may attempt to intimidate or threaten debtors in an effort to receive payment and reset the clock. As a result, it is important to refuse to make a payment and ignore collection calls and letters after the original time limit passes.

If debtors can afford to do so, it is smart to pay off past debts to maintain a good credit score. However, if that is not possible, it is important to retain documents that list the last payment received by their creditors to keep track of the age of each account in default. If creditors or collection agencies claim a different date than the one held in the records, it is important for debtors to file a dispute to obtain proof of money owed on the account and date of last payment. A dispute will keep creditors from moving forward with collection actions, including filing a report with the national credit tracking agencies.

Forgiveness Of Debts

Creditors cannot file a claim with the court after the account reaches the end of the statute of limitations for that jurisdiction. As a result, debtors are not required to make any further payments and the debt will drop off the credit report. Creditors can write off the forgiven debt on their taxes that year. Depending on the account type, debtors may still owe taxes on the forgiven amount. Credit scores will not immediately jump back up after the debt drops off. Instead, debtors will need to work on paying bills on time to increase the score enough to qualify for future accounts. Alternatively, debtors can open a secured credit card to bring their score back up to a functional level.