Over the last few years the federal government, and local and state governments as well, have begun hiring private debt collectors to collect on the millions of unpaid tax dollars that Americans owe, as well as even things like small unpaid parking tickets and unpaid highway tolls.
It’s a great deal for a lot of cities, local governments and even states that are strapped for cash. They get their collection services for free because they outsource the “dirty work” to private companies who, as you might imagine, charge sky-high fees to debtors.
For debt collectors already known for their sleazy behavior, it’s a great deal as well. The reason is simple; because they’re working for the government, they aren’t burdened by consumer protection laws, which gives them the ability to use even more aggressive tactics than they use otherwise. Indeed, they can get the power to threaten debtors with, for example, suspension of their drivers license, arrest, foreclosure on their home and garnishment of their wages, all with the blessing of Uncle Sam.
In many states they’ve already passed laws that give private debt collectors the ability to charge steep fees for their work as well. For example, in Texas the interest on government penalties that can be tacked on can reach upwards of 30% and, in Florida, as high as 40%. When it comes to unpaid tolls, these can effectively rise to 100%, which means that a small unpaid toll can, after debt collectors get a hold of it, quickly increase to hundreds of dollars.
While consumer advocates across the country try and do something to stop this kind of aggressive tax collection tactics and laws, it keeps getting worse and, even more, it’s all 100% legal. Tai Vokins, a former Assistant Attorney General and attorney out of Kansas says that “They keep figuring out ways to stack these fees up,” adding that “They’re preying on the absolute poorest people.”
Indeed, debt collection agencies and the law firms behind them are thriving, all because of federal and state governments that keep sending them lucrative contracts for their work. One of the worst offenders is law firm Linebarger Goggan Blair & Sampson, a company that has had dozens of scandals over the last few decades and even seen one of its top executives do jail time, and yet the government is still sending them contracts for tax collection.
All of which means simply this; do your best to pay your taxes on time, as well as tolls, tickets and anything else where the state or local government is in control. If you don’t, things could quickly and easily get out of control and end up costing you much more money.