GovernmentExecutive.com

The House Wednesday is expected to pass a bill eliminating the authority of the IRS to use private debt collection companies to pursue small taxpayer debts, as opponents look to the Senate to stop the measure.

The IRS last year began assigning thousands of accounts of individuals who owe taxes to private debt collection companies, which can earn commissions of close to 25 percent for each dollar recovered.

The agency has said that because it lacks the manpower to recover the debts, the collection companies over 10 years can add up to $2 billion to federal coffers.

In the face of strong opposition by the National Treasury Employees Union, which represents many IRS employees, the program has become emblematic of what many Democratic lawmakers see as a broad overreliance by the Bush Administration on private contractors to do federal work.

Rep. Chris Van Hollen, D-Md., who co-sponsored the measure, said "prospects of the passage are good."

In the Senate, where a companion measure has yet to emerge from committee, prospects are dimmer. Senate Finance ranking member Charles Grassley, R-Iowa, opposes the bill and lawmakers such as Sen. Charles Schumer, D-N.Y., have indicated interest in a compromise.

Dan Drummond, a spokesman for the Tax Fairness Coalition, a group representing collection agencies with IRS contracts, said that opponents hope senators will block the bill or fashion a compromise where the program remains in place with some portion of the revenue tax collectors generate diverted to hire new IRS employees.

COMMENTS

• If I recall correctly, a few years back the IRS outsourced the processing of tax returns in the state of Connecticut. The contractor was paid according to how many returns could be processed, and there was a penalty clause if the contractor could not process the returns in a timely manner. You can guess what happened next. The contractor fell behind and, to avoid not being paid in full, its employees shredded hundreds of tax returns. Months later, my mother received a notice from the IRS that her amended tax return could not be processed because her original return was never received. Thank goodness she kept a copy, which she dutifully submitted, but then the IRS tried to collect penalties because it had not received tax returns from so many people. The IRS only backed down because the public uproar was deafening. If the Government wants your money, it should make the effort to collect, not outsource the problem to contractors who only care about the bottom line. Anonymous Too Posted October 11, 2007 3:23 PM
• When the government went to outsourcing the work. They have given a wide opening for idenity theft. That is when you begin to see more and more of problems. Along with the financial companies that no longer send the checks back to the people, they supposely shreed and send you a copy. Too many accounts are being used and not by the account holder. We have open ourselves up for theft and no one making the rules seems to see this. I don't like any this so called outsourcing. When will they wake up and realize it is costing us OUR TAX DOLLARS and eliminating the government jobs. Many jobs have been eliminated and if they go to work outside the government, they are penalized on their Social Security and on their spouse's social security. We are penalized even more because work for the government and are loosing our jobs because of this outsourcing. They need to go back to government doing its own work, we do screening of employees and don't have someone in another country doing our work. NOTE: IT is not just the government it is all companies, you can't talk to anyone you can understand, even in the hospitals now you have a language barrier. We need to go back to the english language and use american employees. anonymous Posted October 11, 2007 7:51 AM