Taxpayer advocate again raps private debt collection effort

The Internal Revenue Service's national taxpayer advocate last week reiterated her strong opposition to the privatization of tax debt collection, in a report released a day after a House committee passed a measure that would bar outsourcing of collections.

As part of her annual fiscal year objectives report to Congress, National Taxpayer Advocate Nina Olson repeated previous assertions that the collection of taxes is an inherently governmental function and should not be performed by private debt collectors.

In addition to expressing concern over potential violations of taxpayers' rights, Olson said the outsourcing fails to save the IRS any money.

"She is concerned that the money spent on the IRS's private debt collection initiative is an inefficient use of government dollars, as IRS collection employees can collect more delinquent tax dollars at a lower cost to the government," the report stated.

The report said the IRS Automatic Collection System collects about $20 for every dollar spent on staffing, while private collection returns about $4 for every dollar spent.

An IRS spokesman said the agency has received the report and is reviewing its recommendations. He declined to comment further.

Former IRS Commissioner Mark Everson testified before the Senate Budget Committee in February that the IRS would not be able to address the cases that private collectors are handling, even with additional staffing. He said the IRS first addresses complex cases requiring unique enforcement authority.

Dan Drummond, spokesman for the Tax Fairness Coalition, which represents the private debt collectors, reiterated that point, noting the private collectors handle basic cases the IRS would not likely get to.

But Colleen Kelley, president of the National Treasury Employees Union and a vocal critic of outsourcing tax debt collection, applauded Olson's report.

"Nina Olson offers an important perspective on behalf of our nation's taxpayers that should be heeded," Kelley said in a statement. "Her often repeated concerns about this program have helped raise congressional and public awareness of both the costs involved and the inherent risks in turning taxpayers' personal information over to the debt collection industry."

One day before Olson's report was released, the House Ways and Means Committee passed the Tax Collection Responsibility Act (H.R. 3056), which would strip the IRS of the authority to enter into contracts with private debt collectors.

The bill anticipates the argument that private debt collection is necessary to close the gap between what taxpayers owe each year and what they pay. As the bill repeals private collection, it would bring in revenue through changes in expatriation taxes, increases in information return penalties, temporary increases in tax requirements for some large corporations, and other measures.

The legislation passed the committee by a vote of 23-18.

Drummond questioned the decision based on what the program has achieved thus far.

"Obviously, we disagree with the House Ways and Means Committee," Drummond said. "We strongly feel the program has been very successful. We've brought in $20 million, we have great customer satisfaction rates, we're doing all the right things -- why do they want to kill the program?"

Drummond said it is hard to tell what the fate of the legislation will be.

"Clearly this has a long way to go before it's ever enacted," Drummond said. "With the current political and legislative landscape, it's hard to say. You basically have two different tracks being taken within each chamber."

Drummond said while the House committee voted to end the private collection program, the Senate has mandated that for every private debt collector hired, an IRS employee must be hired or retrained for collection.

"We're not here to replace, nor have we replaced, one single job," Drummond said.

"We believe there is strong support in both the House and Senate for ending the IRS' use of private tax collectors," Kelley said. "Collecting taxes is a basic government function that should not be assigned to profit-making businesses …The taxpayer advocate's latest report will help continue to build support for ending this program."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.