Will Debt Collectors Collect Taxes?

Dec 30, 2015

Is your small business behind on tax payments? Pretty soon you may get a call from a private debt collector instead of the IRS. A highway bill was released last week with a provision that forces the IRS to use certain private companies to collect taxes. This debt-collection provision is attached to a $305 billion, five-year highway bill. The Senate is set to vote on the bill soon, and House Speaker Paul Ryan believes the bill will have “good majority support.” But the bill has created contention on Capitol Hill and within the IRS.

President of the National Treasury Employees Union, Tony Reardon, is dissatisfied with the potential bill. He recalls that using private collection agencies for federal tax collection was tried twice in the past 20 years, but the government lost money both times. In 2014, the IRS Commissioner John Koskinen testified that using private collectors cost the government considerable revenue between 2006 and 2009. Koskinen blames the aggressive collection practices of private collection agencies.

But according to the Congressional Budget Office, the bill is supposed to generate $4.8 billion in 10 years. In addition, the highway bill would also deny or revoke the passports of taxpayers who owe the government over $50,000 in taxes. This provision is designed to motivate delinquent citizens to pay what they owe.

If the bill does pass, it could mean that Americans who have never dealt with private collection companies, will now have to discuss tax collection with private companies and not the IRS. But this also creates an opportunity for debt collection merchants to work in the tax collection field.

If you have a debt collection business, there is a high demand for your services. A great deal goes into staying on top of the various state and federal laws. Debt collection companies without the ability to process a variety of payments will suffer. EMB is an online payment processor that provides payment processing solutions like debit and credit card processing, ACH payment processing, and iCheck to make payments easier for your customers.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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