Last week police in a suburb of Mumbai, India arrested 70 people for allegedly running a call center scam that made thousands of calls per day to Americans, telling them they owed back taxes to the Internal Revenue Service. Reps threatened consumers with imminent arrest if they didn’t pay.

According to the Wall Street Journal, U.S. authorities say that more than 8,800 victims have paid more than $47 million as a result of scams like this.

This incident is the latest in a series of scams raising concerns about the renewed IRS program to begin private collection of certain overdue federal tax debts. Mandated by the Fixing America’s Surface Transportation Act, or “FAST Act" signed in late 2015, this will be the third attempt at such a program by the IRS. Earlier programs occurred in 1996 and 2006.

insideARM Perspective

Late last month insideARM reported about the current IRS plan, and the Agency's award of the contract to four firms. Due in part to the recent scams, the IRS has given consideration to how to help avoid taxpayer confusion that could be caused by third parties calling on its behalf.

According to the IRS announcement,

The IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The agency will then send a second, separate letter to the taxpayer and their representative confirming this transfer. Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes.

The IRS will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment.

Private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will be informed about electronic payment options for taxpayers on Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency. 

The IRS will continue to keep taxpayers informed about scams and provide tips for protecting themselves. The IRS encourages taxpayers to visit for information including the “Tax Scams and Consumer Alerts” page.

For more information visit the Private Debt Collection page on

According to the Wall Street Journal, it seems that the outsourcing industry in India – like that in the United States - is also scrambling to manage its reputation because of isolated but highly publicized incidents like this. A spokesperson said that, generally, larger firms have more sound and contemporary [security] practices in place, since they work for large global clients.

Indeed, the research we at insideARM did several years ago into complaints to the Federal Trade Commission revealed that the most egregious problems – for instance, where collectors threatened consumers with arrest or bodily harm – rarely (if ever) came from legitimately operating collection agencies that could be identified. They came from scam operations set up for that purpose only.

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