Private debt collectors are subject to a variety of laws policing their collection of private debts. The Fair Debt Collection Practice Act (FDCPA) imposes clear and strict requirements on debt collectors – such as preventing them from shaming consumers into payment by publishing the names or calling their parents, preventing them from lying to consumers or threatening them with illegal behavior.
However, FDCPA applies only to consumer transactions and does not cover matters such as tax debts. Boyd v. J.E. Robert Co., 765 F.3d 123 (2d Cir. 2014); Beggs v. Rossi, 145 F.3d 511 (2d Cir. 1998). Federal employees are also specially exempted from the FDCPA. 15 U.S.C. § 1692a(6)(C).
So, what’s left to protect taxpayers?
The Fair Tax Collection Practices Act (FTCPA) and the Taxpayers’ Bill of Rights (TBR), provide the one exclusive remedy for taxpayers who are subjected to abusive debt collection by the IRS. The FTCPA prohibits violent or criminal threats, abusive language and intentionally harassing phone calls. 26 U.S.C. § 6304. Also prohibited are calls at a time known to be inconvenient, calls direct to a taxpayer who has an attorney and calls at work, if the IRS knows the taxpayer isn’t allowed to take personal calls. 26 U.S.C. § 6304(b). It also requires that the IRS tell a taxpayer before they contact a third-party. 26 U.S.C. 7602(c)
There are some substantive protections – a “light” version of FDCPA. However, the only way a taxpayer can vindicate those rights is by suing the United States under 26 U.S.C. § 7433 (The Taxpayers’ Bill of Rights). TBR requires that:
- The taxpayer exhaust administrative remedies first (by complaining to the IRS in the required manner)
- Damages are the lesser of $100,000 for negligent and $1,000,000 for malicious violations or the “actual, direct economic damages sustained by the plaintiff as a proximate result of the reckless or intentional or negligent actions of the officer or employee.”
It is the last factor that will usually prevent a taxpayer from suing. The kinds of damage likely to be caused by even the worst abusive debt collection are not direct, economic damages, but rather are invasions of privacy and emotional distress.