CREDITWRENCH-TheTruth

Today in a discussion with CREDITWRENCH CEO Billie Bauer claimed collection agencies collecting unpaid taxes are subject to the FDCPA.

As always, I quickly corrected Creditwrench CEO Billie Bauer on his lack of understanding of how the FDCPA does not apply to collection agencies collecting unpaid taxes.

The FDCPA only applies to debts incurred for personal, family or household purposes. This definition is contained within the FDCPA itself. Additionally, courts have consistantly upheld its plain definition.

There is ample case law at all levels, state, federal, and appellate that all consistantly hold that taxes do not qualify as a debt under the FDCPA.

Staub v. Harris, 626 F.2d 275 (3d Cir. 1980), the Third Circuit held that a past- due tax obligation is not a "debt" because it generally is used for communal rather than "personal, family, or household purposes."

The Staub court noted that taxes "'are public burdens imposed generally upon the inhabitants of the whole state, or upon some civil division thereof, for governmental purposes, without reference to peculiar benefits to particular individuals or property.'" Staub, 626 F.2d at 278 (quoting Black's Law Dictionary 1307 (5th ed. 1979)).

The court reasoned that taxes are used for more general purposes than the statute requires since they "provide funds for such nonpersonal purposes as prisons, roads, defense, courts and other governmental services" and thus the taxpayer receives only a general public benefit from the taxing authority. Id. See also Federal Trade Commission--Statements of General Policy or Interpretation Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed. Reg. 50,097, 50,102 (1988) (unpaid taxes not "debts" under the FDCPA).