Randolph Law Firm, P.C.

IRS agents must follow fair debt collections practices

In Nevada and nationwide, when a small business gets behind in its corporate income tax or payroll tax withholdings, the IRS collection mechanisms will begin. There will be the usual array of written mailed notices, but in many cases the IRS will also assign a collection agent to the case. Fortunately, when this happens the IRS must follow a strict code of fair collection practices.

Most people may not know that the IRS is essentially considered to be a bill collector under the Fair Debt Collection Practices Act (FDCP). That is the federal law that protects consumers from improper, harassing and unethical debt collection practices by debt collectors. Through legislation and regulatory codes, the IRS has been charged to comply with that protective legislation. In fact, a taxpayer who is abused by an IRS agent violating the FDCP can bring a lawsuit for damages against the federal government under the federal law to recoup for the intrusion.

The law has numerous consumer protections. For example, a collector cannot contact a taxpayer at their place of employment when it is known or should be known that the employer forbids such communications. Threatening violence or harm is prohibited, along with using obscene language. Harassing the taxpayer by making continuous calls to the person’s phone.

The list goes on, and in most instances, it is easy to make a common sense determination where collection activities have stepped over the line. Fortunately, it is reported that there have been few violations of the FDCP by IRS tax collection agents nationwide, including in Nevada. That seems to testify to the basic professional training that they receive. Of course, a rotten apple can come along occasionally and that will be the time to consult quickly with a tax advisor or tax attorney to bring appropriate action against the agency or otherwise act in one’s behalf.

Source: Fox Business, "IRS Fair Collection Practices and Your Small Business", Bonnie Lee, June 20, 2014

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