Plymouth City Council was at fault for refusing to accept complaints about its debt collectors says an inspector's report.
The Local Government Ombudsman said the council was wrong because the enforcement agent was acting on its behalf.
A debtor, identified in a report as Miss X, complained that the bailiffs turned down a reasonable offer of repayment without giving a reason.
She also complained that the same bailiffs broke regulations by charging multiple enforcement fees.
The agent was used to collect the debt after magistrates issued a liability order for unpaid council tax.
The watchdog upheld two cases against the council, saying it was wrong to refer complaints about the agent’s behaviour back to the agent.
A Plymouth City Council spokesman said: “We accept the findings of the ombudsman in both cases and have already implemented all of the recommendations.”