House Committee to Hold Hearing on Private Tax Collection

The U.S. House Ways and Means Committee Chairman Charles Rangel (D-NY) yesterday announced that the Committee will hold a hearing on the Internal Revenue Service’s use of private debt collection companies to collect federal income taxes.  The hearing will be held on Wednesday, May 23, 2007, in 1100 Longworth House Office Building in Washington, DC, beginning at 10 a.m.

Because of the limited time available to hear witnesses, oral testimony will be from invited witnesses only.  Witnesses at the hearing will include representatives of the Internal Revenue Service (IRS), National Taxpayer Advocate, U.S. Government Accounting Office, National Treasury Employees Union, and contractors involved in the collection of federal income taxes. The Committee did say, however, that any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.

The hearing will focus on issues related to whether: (1) federal income tax collection is a fundamental governmental function and, as such, should not be contracted to the private sector as a profit-making venture; (2) the IRS can collect federal income taxes more efficiently and effectively than private debt collection companies; (3) taxpayers are subject to confusion, questionable private debt collection company tactics, harassment, and abuse due to the use of private debt collectors; (4) adequate options are available to the IRS to address uncollected taxes in the accounts receivable inventory; (5) the program is ready for expansion and new private debt collection contracts should be awarded in the coming months; and (6) Internal Revenue Code section 6306 – the specific Code that permits the IRS to contract with private collectors — should be repealed.

In announcing the hearing, Rangel stated, “The IRS use of private companies to collect federal income taxes is an affront to the integrity our tax system. The collection of federal taxes is a basic governmental function and one that should not be assigned to profit-making businesses.  The outsourcing of IRS tax collection to the private sector carries an unacceptably large risk that taxpayer rights will be trampled and their personal identities stolen.  It is unacceptable that taxpayers are footing the bill for a program that pays private companies up to a 25 percent bounty when the IRS can do the same job for pennies on the dollar.”