Source: Joe Davidson, Washington Post, November 3, 2015
…Congress is considering legislation that would again allow the Internal Revenue Service (IRS) to use outside collection agencies, after previous programs failed twice. The first attempt, from August 1996 through June 1997, lost money. So did the second one. Former IRS commissioner Douglas Shulman stopped the 2006-2009 effort, saying “I believe this work is best done by IRS employees.” … Sixteen senators, including Ben Cardin and Barbara Mikulski, both Maryland Democrats, sent a letter to the congressional leadership last month detailing their opposition to the measure, which is included in a highway funding bill. Among their objections:
- Commission incentives could lead private collection agencies to “jeopardize taxpayer rights” if they “minimize due process in order to maximize profits.”
- The 2006-2009 program resulted in “the Treasury collecting $63.4 million in revenue while accruing total costs of $67.8 million, a loss of $4.4 million to the federal government.”
- Private collection agencies “will unfairly target low-income taxpayers.” The IRS can work with taxpayers by allowing them flexible payment schedules or suspending collection actions or reducing the amount owed. But private collectors’ “sole interest is to collect from a taxpayer the balance due…They cannot provide any advice or use the tools IRS employees have.”…
Related:
After Years of Cutting Funding, Republicans Seek to Privatize Part of the IRS
Source: Eric Katz, GovExec.com, July 22, 2015
A new compromise package to fund the nation’s surface transportation projects would privatize a major function of the Internal Revenue Service, delighting Republican lawmakers looking to shrink the agency but rankling its advocates. The highway funding bill crafted in the Senate by Majority Leader Mitch McConnell, R-Ky., and Sen. Barbara Boxer, D-Calif., is proposing to raise $2.4 billion by handing the task of tax collection over to private companies. The bill would require the Treasury Department and IRS to contract with private collection agencies as one of several pay-for provisions of the compromise highway bill…Congress authorized the Treasury Department to contract out the task of recouping unpaid tax bills in 2006, but the agency phased out the program in 2009. The National Treasury Employees Union said on Wednesday the program proved unsuccessful, as the government was spending more on administrative fees and commissions to the companies than it took in…“The use of PCAs to collect tax debts has repeatedly been shown to be a waste of taxpayer dollars,” NTEU President Colleen Kelley wrote in a letter to senators. “The Treasury secretary currently has the authority, but has chosen not to enter into such contracts.” She added the commission-based payment incentive led to abuse of the system, and a disproportional focus on low-income taxpayers….
