Innovative IRS payment plans help make a dent in the tax gap
Washington, D.C. (November 28, 2018) – The Internal Revenue Service (IRS) reports that taxpayers with uncontested tax underpayments are responding well to the flexible payment solutions offered by the Private Debt Collection (PDC) Program – which expands the customer service capacity of the agency to provide debt counseling services along with a variety of customized, purely voluntary payment options to help address lingering tax debts.
As a result of PDC Program outreach, more than 25,000 customized installment plans are already underway and tens of thousands of additional taxpayers have opted to pay their past due tax accounts in full, generating in excess of $88 million in tax revenue previously thought to be uncollectible.
“People get behind on paying their taxes for a wide variety of reasons – some are overwhelmed by the paperwork, or are too busy to follow-up, others have been sidetracked by a disruption in their life or find themselves facing a temporary financial hardship,” said Kristin Walter, spokesperson for the Partnership for Tax Compliance. “The PDC Program conducts telephone outreach to offer taxpayers a very manageable way to voluntarily address a tax debt. For example, a taxpayer who owes $1500 from their 2015 taxes can work with program representatives to set up a payment plan for for as little as $47 per month.”
The IRS assigns tax underpayment accounts – where a taxpayer has filed a tax return, acknowledges that they owe, but has not yet paid their tax debt – to PDC program representatives who conduct telephone outreach make contact and determine if a taxpayer can pay their past due taxes.
Taxpayers can choose to pay their account in full within 120 days or build a payment plan tailored to their particular budget. If a taxpayer shares that they cannot pay their tax obligation, even over time through a payment plan, they are removed from the PDC program and their account is referred back to the IRS. Participation in the PDC Program is purely voluntary and those participating also have the ability to restructure their payment plans along the way if their circumstances change.
“Typically, the type of tax accounts assigned to the PDC Program are more than 4 years past due, making them very difficult to collect as people move or their contact information has changed,” said Walter. “Those who can be contacted, however, are often relieved to have found a manageable and voluntary solution that helps them to resolve their tax debt over time.”
Private Sector Best Practices Help Boost Federal Collections
The PDC Program was created by Congress, as part of bipartisan legislation, and officially launched in April 2017. The effort seeks to leverage private sector resources and best practices to expand IRS customer service.
There are currently millions of inactive underpayment accounts in arrears representing approximately $131 billion in federal tax revenue. Each year, $20 to 30 billion of that tax revenue is lost as a portion of accounts age out due to the collection statute of limitations. If a portion of this previously uncollectible tax revenue is brought in by PDC program payment plans, the federal budget increases and the IRS can further augment collection and recovery capabilities by adding more internal agency staff.
Recent press statements issued by both Senators Schumer (D- NY) and Grassley (R-IA) demonstrate bipartisan agreement that the IRS and its private sector partners are successfully executing the PDC program – returning millions to the federal budget and funding new jobs across the country, including additional internal staff at the IRS.
How the PDC Program Works
PDC contractors are limited to calling assigned taxpayers in arrears and offering to facilitate payment arrangements tailored to their ability to pay. PDC contractors are subject to the same oversight as IRS agents. Contractor calls are monitored by the IRS and a performance measurement system was developed to assess program success.
More than 50 percent of the tax revenue generated bolsters the U.S. Treasury while another 25 percent of the collected funds strengthens the internal collection capabilities of the IRS. To date, the PDC program has generated nearly $19 million for the IRS Special Compliance Personnel Program Fund, which provides the agency with the resources to hire and train new internal IRS collections staff.
For more information, visit www.partnershipfortaxcompliance.org
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About the Partnership for Tax Compliance
The Partnership for Tax Compliance is a 501(c)6 non-profit organization that works to educate policymakers and taxpayers about the importance of the public/private partnerships that advance fair tax participation and bolster state and federal government treasuries by recovering tax underpayments. This new coalition aggregates and leverages the vast expertise of the private recovery companies that support the IRS PDC Program, including CBE Group, Performant Recovery, ConServe and Pioneer Credit Recovery.