Taxpayer’s Debt-Let IRS Collect Unpaid Taxes
The House voted Tuesday to end an Internal Revenue Service program that pays private debt collectors to go after tax scofflaws who owe the federal government billions of dollars.
The IRS expects to lose $37 million under the program, which pays private companies commissions of up to 24 percent. However, contractors have brought in $49 million, just over half of what it has cost to establish the program.
It was created as part of the government’s drive to close the tax gap (the difference between what is owed and what is collected), which was estimated at $345 billion in 2001. But critics cite several concerns, among them the expense of a program that could be done more effectively by the IRS.
The National Taxpayer Advocate, an office within the IRS, has received more than 1,500 complaints about the companies’ tactics, which opponents say amount to harassment, according to the Washington Post. Collectors have repeatedly called the wrong taxpayer or sent notification addresses to the wrong address. Often, collectors will ask taxpayers for their Social Security number for verification, contrary to sound advice not to hand out that information to unknown persons to avoid identity theft.
However, the IRS offered what is probably the strongest argument for ending the private collection system. The agency has told Congress that its own employees could collect almost eight times as much as private collectors since the IRS has enforcement methods not available to private companies, such as the use of liens or garnishing wages.
Sen. Byron Dorgan of North Dakota, a program critic, has called the private collection system a “hood ornament for incompetence.” Iowa Sen. Charles Grassley, a program defender, countered that the private collectors go after debts “the IRS has no interest and no will to pursue.”
If that is the case, then the IRS needs the resources and a change in attitude to do the job.
Watertown Daily Times article
