Congress Hamstrings Collectors as Uncollected IRS Debts Reach $290 Billion

The Internal Revenue Service had uncollected debts of $290 billion at the end of the fiscal year, a 10-year high, according to a recent report by the Treasury Inspector General for Tax Administration. The report, "Trends in Compliance Activities through Fiscal Year 2007," found the total included $34.9 billion in queue for collection, which the report found “might never be worked.”

That’s precisely why the agency should expand its private debt collection program, says Jeff Trinca, spokesperson for the Tax Fairness Coalition, a group representing private collectors currently working for the IRS.

“During 2007, more new debts came to the IRS than were closed, widening [the total] by a staggering 63 percent. Equally disturbing, the queue numbers don’t represent the $31 billion the IRS has given up on ever collecting,” said Trinca.

This $31 billion represents many debts under $5,000, the bulk of the accounts in the private debt collection program. The program netted the government $11 million in fiscal 2007.

Trinca says the program could do even better if it were expanded beyond the two companies currently running it, CBE Group and Pioneer Credit Recovery. The program was initially designed to include between 12 and 15 companies, but has been limited to its current size due to pressure from the National Treasury Employees Union, which includes IRS employees, and its allies, Trinca said.

In the days leading up to April 15, the NTEU successfully pushed a bill through the House that would kill the privatization program. However, similar measures sit in the Senate going nowhere. Trinca doesn’t expect any movement to expand the program, either, because Congress’ budgetary process is already behind schedule. Trinca believes that the program is likely to continue in its current form what with Capitol Hill focused on its summer recess and the November elections.