IRS: Private Debt Collection Revenues Up; Taxpayers’ Identity Theft Declines

IRS releases report on identity theft and successful debt collection trends in advance of tax filing season, when collectors can discuss paying debts through refunds with consumers.

Heading into tax filing season, the debt collection industry is poised for continued success helping consumers.

The IRS continues to see increased collections under the private debt collection program and reports private collection agencies have helped nearly 200,000 taxpayers who set up a payment plan or paid their balance in full, according to its latest progress report, “Putting Taxpayers First .”

Revenue continues to exceed costs of the program since 2018. The IRS assigned more than 2.4 million cases to private collection agencies, totaling more than $22.5 billion in balances due, according to the report. The program, which began in 2017, has yielded more than $301.7 million in revenue.

The upcoming tax filing season is a great time for accounts receivable management industry professionals to ramp up communication with consumers about managing their debt payments through refunds. ARM professionals should also be prepared to hear concerns about identity theft and fraud.

Consumers are subject to tax-related identity theft when someone steals their Social Security number (SSN) to claim a tax refund or earn wages. If consumers get a notice from the IRS saying more than one tax return was filed with their SSN, or IRS records show they have wage income from an employer they don’t know, tax identity theft may have occurred, according to the FTC .

Those concerns may not come across the phone lines as much in 2020, however, because the IRS reports that identity theft claims from taxpayers have declined for the third consecutive year.

The number of taxpayers reporting they were victims of identity theft fell 71% in 2018 while the number of confirmed identity theft returns stopped by the IRS dropped by 54%; from 1.4 million in 2015 to 649,000 in 2018, according to the progress report.

Identity theft affidavits submitted to the IRS from taxpayers declined from 677,000 in 2015 to 199,000 in 2018.

Despite the progress, the IRS says in the report it is continuing its tax-related identity theft prevention efforts; making tax season a valuable time for debt collection professionals to continue consumer education and outreach as well.

ACA International members may find more resources on working with consumers during tax season through the ACA SearchPoint® library using the tags Taxes and Identity Theft. ACA International members must be logged in to access the ACA SearchPoint® library.

The tax season begins for individual filers Jan. 27 and the deadline is April 15. The IRS expects more than 150 million tax returns filed by individuals this year, according to a news release .

The upcoming February issue of Collector magazine will also feature coverage on working with consumers during tax season.