Bill Would Halt IRS Debt Collection Contractors

More than a dozen senators have signed on to sponsor a bill that would stop the Internal Revenue Service from using private debt collectors to collect unpaid taxes.

Sen. Byron Dorgan, D-N.D., and Sen. Patty Murray, D-Wash. introduced the legislation. Both objected to the plan last year as it neared implementation.

Congress itself paved the way to the pilot collection program as part of the 2004 American Jobs Creation Act, authorizing the IRS to hire private firms to collect federal tax debts. IRS Commissioner Mark Everson has admitted that the program will cost more than the agency simply hiring more tax collectors, but under federal budget rules money spent to hire collectors is treated as a discretionary expense, which the Republican-led Congress had been forced to cut at the time.

Many of the senators’ privacy concerns echoed those outlined last week in National Taxpayer Advocate Nina Olson’s annual report, as well as the uncertainty of any real cost savings from the program. In announcing the proposed rollback, the senators also recalled a 1996 attempt by the IRS to use private debt collectors that resulted in security violations and inappropriate collection activities. The IRS has touted the training safeguards built into the current pilot program, which involves a trio of agencies.

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