Elections May Put IRS Private Debt Collection Program in Peril

by Mike Bevel, CollectionIndustry.com

Folks out there really don?t like the IRS?s plan to use private debt collectors. And now, with the Democrats in the majority in both the House and the Senate, it looks like the little program that could?well, won?t.

“I think it’s a terrible program, and I’m going to let [IRS officials] know in as many political and legislative ways as I can,” Rep. Charles Rangel, the New York Democrat expected to be the next chairman of the House Ways and Means Committee, told the Wall Street Journal.

The House has already voted to block funding for the debt-collector initiative for the fiscal year that began Oct. 1. The Senate hasn’t acted yet. But among those concerned about the IRS program is Sen. Patty Murray of Washington, ranking Democrat on the Senate Appropriations subcommittee that includes Treasury funding.

“I’m deeply concerned that the IRS’s plan would not adequately protect taxpayer privacy, would not ensure all taxpayers are treated fairly and respectfully, would not guarantee any cost savings to the U.S. Treasury, and would pre-empt the Senate’s debate over outsourcing tax collection,” Sen. Murray told the Wall Street Journal. She has co-sponsored legislation with Sen. Byron Dorgan (D., N.D.) to prohibit the IRS from going forward with “this deeply flawed initiative.”

Some could, and have, argued that it?s ironic to speak of unfair treatment in light of the fact that the folks targeted by the program have sort of unfairly decided to not-so-much it with the tax paying. IRS Commissioner Mark Everson has defended the program by saying the use of private agencies will help the IRS reduce the “significant and growing amount” of tax liabilities now deemed uncollectible. The private firms will be used to supplement, not replace, IRS personnel, says Mr. Everson, adding that the agency lacks the personnel to go after all outstanding tax bills.

All of that, of course, matters little in the court of personality. Face it: a plan to join the IRS with collection agencies was going to have a hard time winning over supporters in the first place.