A federal report says that the Internal Revenue Service needs to put a better system in place to evaluate the results of the private debt collection program it implemented this fall.The Government Accountability Office looked at a trio of issues, including whether the IRS addressed critical success factors before limited implementation, whether the IRS will assess lessons learned before fuller implementation, and finally, whether the IRS’s planned study will help determine if using private contractors is the best use of federal funds.

According to the GAO, in 2005, the inventory of tax debt with collection potential had grown to $132 billion. Congress authorized the IRS to contract with private collection agencies to help collect tax debts, implementing a pilot program in September and planning for a larger-scale implementation by January 2008.

GAO recommended that the IRS complete establishing for measurements for the collection program:

  • Results-oriented goals and measures;
  • Reliable, verifiable costs;
  • Evaluation plans; and, criteria and processes for assessing the program before deciding whether or not to expand it.

The IRS will have a little more than six months to identify the lessons learned before incorporating them into the next contract solicitation, which the agency intends to release in March 2007. The GAO also noted that the design of  a comparative study -- looking at whether the agency should continue using private contractors, as well as how the program’s funds could be allocate for another means of collection -- will be of great importance for policymakers determining the future of the program.

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