preview

Case Study: Pioneer Credit Recovery

Better Essays
If you're behind on you're taxes, you could get a phone call from an unexpected place this year.

For-profit debt collectors have been hired by the IRS to chase down long-overdue taxes that the government agency lacks the resources to work on. Four companies were selected for the new contracts, including one whose parent company is currently being sued by the US government over its student loan debt collection practices.

Pioneer Credit Recovery is a subsidiary of the student loan giant Navient; both companies were the subject of a Consumer Financial Protection Bureau lawsuit filed in January. Pioneer was selected for one of the IRS debt collection contacts last September, alongside ConServe, Performant and CBE Group.

Navient, formerly known as Sallie Mae, currently holds a federal government
…show more content…
A 1996 pilot program to use private contractors left the IRS with more money spent than retrieved. It reported $4.1 million in expenses by the end of the program in January 1997, with only $3.1 million in collections, according to a Government Accountability Office report.

Ben Barrett, a program associate with the education policy program at the progressive New America foundation, told BuzzFeed News that the government contracting with a private collector poses certain profit incentives that could open up "unsavory practices, illegal practices."

But he also said a private contractor, with IRS oversight, could collect debts with more efficiency than the government. The Treasury Department said in 2016 that its pilot program to collect on defaulted student loans with a gentler approach failed in comparison to private companies.

"Obviously nobody should be doing anything illegal," he said. "You should never cross that line. In so far as they can adhere to the law and get a delinquent taxpayer on the phone through whatever legal means necessary, that’s not necessarily a bad
Get Access