House Committee Votes to Repeal IRS Private Collection Program

The House Ways and Means Committee Wednesday approved a bill that would strike language from the country’s tax code that authorizes the IRS to hire private debt collectors.

By a vote of 23-18, the committee Wednesday approved H.R. 3056, dubbed the “Tax Collection Responsibility Act of 2007,” that specifically removes the language in the Internal Revenue Code that gives the IRS permission to use private debt collection agencies for certain delinquent tax cases. The bill now goes to the full House for consideration.

Democrats and a cadre of opponents have long sought to kill the program, arguing tax collection is the duty of the federal government. Bill Co-sponsor Chris Van Hollen (D-MD), said in a press release that privatizing tax debt collection allows “collection agencies to harass American taxpayers, with the incentive of collecting their commission as their primary motivation.”

Although the vote has been widely reported as along party lines, one Democrat, John Tanner from Tennessee, broke with his party peers and voted against the bill. A spokesman for Tanner told insideARM.com, “The Congressman feels that with proper safeguards, this program is a reasonable approach to collecting back taxes for the IRS.”

The IRS estimates that the program would bring in $1.5 to $2.2 billion in the next ten years if allowed to continue.

The new bill complies with PAYGO (pay-as-you-go) budgetary rules reintroduced in Congress when the Democrats came to power in early 2007. The rules state that if a revenue-generating initiative, such as the IRS private debt collection program, is cut, offset programs must be instituted to ensure the revenue is not lost.

A Van Hollen spokesperson told insideARM.com that the revenue will be made up through stepped up enforcement of tax payments by those who renounce their citizenship, increasing penalties and repealing suspended penalties for late filings, and by temporarily increasing for three months estimated taxes required from certain large corporations in 2012.