Senate bill would allow private tax collection

Private-sector debt collection companies would have to follow the same rules as federal agents.

The Senate this week passed a corporate tax bill that would allow the Internal Revenue Service to let private companies help with debt collection.

Under the tax legislation (S. 1637), which passed Tuesday night by a vote of 92 to 5, the IRS could sign contracts with private-sector debt collection companies, as long as those companies abide by the same rules as federal agents. The bill would also require agency officials to send lawmakers reports on private collection efforts.

The National Treasury Employees Union, which represents 98,000 IRS employees, has long opposed any plans to let private companies help with tax collection, and has vowed to fight the measure. The House has yet to pass its version of the corporate tax bill. At the committee level, House members rejected proposals to allow private tax collection.

"Privatizing the function is not only the most inefficient way to collect tax debts," said NTEU President Colleen Kelley in a statement criticizing the Senate bill. "It puts private and sensitive taxpayer information at unacceptable risk by making it available to the most complained-about industry in America -- debt collectors."

Previous attempts to outsource debt collection have failed, Kelley noted. But the Bush administration supports the limited use of private debt collectors to free up resources for IRS agents to focus on more complex enforcement cases. The president proposed private collection in his fiscal 2004 and 2005 budget requests.

In addition to these provisions, the Senate corporate tax bill contains language designed to encourage disclosures of tax violations. A provision would create a whistleblower protection office within the IRS, and would allow the agency to offer rewards for exposing tax fraud.

While considering the corporate tax measure, the Senate also passed an amendment preventing most civilian federal agencies from outsourcing jobs to contractors working outside the United States. That language is likely to be modified when the bill reaches House-Senate negotiations.