Foes of private tax collection regroup after House defeat

Legislation pending in House and Senate would permanently shut down IRS program to outsource some collections work.

Opponents of the Internal Revenue Service's controversial pilot program to outsource collection of some tax debts will continue their resistance, despite a defeat Thursday in the House.

Supporters of the pilot program used a procedural move last week to remove language from the fiscal 2008 financial services appropriations bill that would have limited the program's funding to $1 million. The language, added by Rep. Jose Serrano, D-N.Y., would have shut down the program in all but name, since the IRS has estimated the cost of continuing it will be $7 million in 2008.

But lawmakers and union representatives who argue that the program puts taxpayer information at unnecessary risk say they have not given up.

The House Ways and Means Committee plans to consider stand-alone legislation to revoke the IRS' authority to contract out tax debt collection, a spokeswoman for Rep. Chris Van Hollen, D-Md., said. Van Hollen, who introduced the bill (H.R. 695) in January, supports hiring more IRS agents instead of outsourcing, the spokeswoman said.

The National Treasury Employees Union, which represents many IRS workers, has consistently opposed the program, and says it will support Van Hollen's bill and a Senate counterpart (S. 335).

"We are urging a swift markup of this legislation," a spokeswoman for NTEU President Colleen Kelley said. "There is support in Congress to end this program." The Tax Fairness Coalition, a trade group that represents private debt collectors, hailed the House move as a victory.

"It's interesting that when they put in the $1 million to limit the program, they didn't put in anything to offset the cost of cutting the program," said Dan Drummond, a spokesman for the coalition.

The program had raised nearly $20 million as of April, and is projected to bring in between $60 million and $80 million in fiscal 2008. The IRS plans to expand the current pilot project into a full-scale program in 2008, a transition that will involve extending contracts to at least three more firms. Right now, the IRS has contracts with two private debt collection firms.