Rebirth Redux

The inexplicable politics of tax debt collection.

Last month, members of Congress brought brand-new Internal Revenue Service Commissioner Douglas Shulman up to Capitol Hill (on April 15, not at all coincidental) for one of their rites of spring: a little IRS bashing. Their focus was the agency's use of private collection agencies to go after certain delinquent taxpayers.

The stage had been set by a front page Washington Post story noting that "despite aggressive collection tactics, the companies have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program." That wasn't exactly breaking news. After all, IRS National Taxpayer Advocate Nina Olson had reported back in January that the effort had shown a "dismal return on investment."

That didn't stop the IRS in March from renewing the contracts of two of the three debt collection firms it has used. At his April 15 appearance, Shulman pleaded ignorance of the entire issue, saying he'd been on the job for only three weeks and needed more time to study it.

On the whole, legislators were disinclined to give him that time. Shortly after Shulman's testimony, the House voted 238-189 to prohibit the use of private debt collection firms. "The collection of taxes is an inherently governmental function that should be restricted to properly trained and proficient IRS personnel," said National Treasury Employees Union President Colleen M. Kelley after the vote.

But this wasn't the first time the House has voted to end the effort. (The Senate has been a different story.) And lawmakers' righteous indignation was a tad convenient. After all, Congress approved the private collection program even though from the beginning it defied logic.

Even its proponents acknowledged that IRS employees could collect tax debts more cost-effectively. But adding more federal employees to the government rolls for that purpose was deemed politically untenable.

Outsourcing debt collection was at best a better-than-nothing approach. Only it's turned out to be worse than nothing. Now, its defenders cling to the notion that the program could have some value even if it isn't cost-effective. Sen. Charles Grassley, R-Iowa, a staunch defender of the effort, was left to say that at least it "has taught the IRS new, more effective techniques."

Let's hope those are some great techniques, and that the IRS will get what would really be helpful-the staff to actually use them.

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