Private tax collectors under fire by House appropriators

The IRS program of using private debt companies to collect unpaid taxes, which has cost more than the collectors have brought in, drew fire Tuesday from the House Financial Services Appropriations Subcommittee.

"The program allows private companies to collect unpaid taxes and to pocket up to 24 percent of the tax revenue they help to collect," said House Financial Services Appropriations Subcommittee Chairman Jose Serrano, D-N.Y. "This program should not be continued."

Despite that appeal by Serrano and Financial Services Subcommittee ranking member Ralph Regula, R-Ohio, new IRS Commissioner Douglas Shulman deferred giving his opinion on the private collection program.

Explaining he has been on the job for only three weeks, Shulman said he understood the congressional concerns but needs more time to understand the program.

Regula wondered why the IRS could not conduct the same collections, saying there is "no magic" to it.

National Treasury Employees Union President Colleen Kelley called for beefing up the IRS workforce, noting there has been a steady decline for a decade even though more tax returns are being filed.

At the end of fiscal 2007, staffing was down to 86,638 from 90,115 from a year earlier. Even though the Bush fiscal 2009 budget calls for $11.4 billion, up from $11 billion Congress appropriated this year, she called it "insufficient and unrealistic" to meet customer service and enforcement.

The private collectors brought in $32 million in gross revenue in fiscal 2007, as compared to projections of $65 million. After commissions, the net revenue of the private collections was $20 million, Kelley said.

"After spending $71 million in start-up and ongoing maintenance costs through the end of fiscal 2007, the IRS private tax collection program lost more than $50 million," she said, citing Nina Olson, IRS national taxpayers advocate. Although Congress voiced opposition to the private program previously, it has failed so far to stop the practice, which involves only three collection agencies. Legislation to halt the program is pending now and has failed in the past.

On another matter, Shulman promised a "nonpolitical, nonpartisan agency" and said he would take a look at any improper electioneering by nonprofit groups. Overall, based on tax returns already filed, Shulman said it "looks like we're having a successful tax filing season."

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:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.


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