Former Tax Man Says IRS Should Not Use Private Debt Collectors

The IRS private debt collection program was hit by another critic Monday. In a piece published in a number of New York Times-owned papers in Florida, former tax examiner Eric Schmitz says that the plan will not work, but takes a tone not yet heard in the debate.

Schmitz, who according to the article worked for the IRS from 1987-97, says that the initiative will fail because all private collectors can do to collect the money owed is “harass” debtors.  If making payment demands over the phone for money owed is harassment, then maybe he’s right.  Of course, in collections making demands for payment over the phone is the lifeblood of the business.  So it appears that the debate over the program has taken a decidedly different tone.

The article does a great job of pointing out what this debate has ultimately become: one of complicated politics.

Schmitz comes right out and says what many on the “consumer” side of the debate have alluded to: conservative Republicans making a play to privatize yet another government function.  And this lies at the core of the current debate.

Seemingly ironic twists have plagued the debate recently.  The article points out that Rep. Charles Rangel (D-NY) has vowed to hold hearings on the program to ensure taxpayers aren’t being subjected to unseemly collection tactics.  This is in the same article that argues the private collectors are so neutered, they can only ask for the money and do little else to try and collect.

It appears that the debate is now government employees vs. private collectors, and whether it’s more palatable to pay staff up the IRS for enforcement or pay private collectors off the top for every dollar they collect.

But the real question this article raises is whether or not merely calling a consumer to demand payment constitutes harassment.  We’d love to hear from the ARM industry on this topic.  If you have an opinion, please email editor@insidearm.com.