IRS doing away with private debt collectors

Say goodbye to private debt collectors working for the IRS -- an idea that Clark has been diametrically opposed since its introduction. The consumer champ never liked that private third parties had access to records pertaining to your tax debt.

The justification for the private debt collectors in the first place had always been that private industry can work more efficiently than government. That's usually true in most cases. However, in this instance, the office of the National Taxpayer Advocate reports that the third party bill collectors actually cost more in expense than they were able to collect.

The IRS will, of course, now have to hire more collectors of their own to go after those people who haven't paid their back taxes.

If you owe money to the IRS and can't pay, it's tempting to not file. You probably figure, "Well, I can't pay, so does it really matter whether or not I file?"

Yes, it does. The IRS has 2 penalties -- failure to file and failure to pay. The former is a heavy-duty one, while the latter brings with it a lower rate of interest than your typical credit card.

Make sure you file on time even if you don't have any money to pay. The IRS actually has an offer in compromise program where you can pay as you go if you're financially stretched.

Are you a small business owner who is having trouble staying open? There's always that temptation to not send the withholding you keep out of your employees' checks and use it to keep your doors open. But this is never a smart move. Just file on time and get on a repayment plan.