Sen. Chuck Grassley, R-Iowa, ranking member of the Senate Finance Committee, defended the Internal Revenue Service's outsourcing of tax collections to private firms by pointing out the thousands of disciplinary actions taken against IRS employees.

In a letter to Sen. Byron Dorgan, D-N.D., lead sponsor of Senate legislation to cut the program, he noted the IRS's own poor track record in closing the "tax gap" between taxes owed but not collected. The House passed its own bill this week that contains a provision repealing the IRS Private Debt Collection Program (see House Repeals Private Debt Collection Program).

"The tax gap of $345 billion grew in part because the IRS either lacks the will, direction, innovation or sound management to stay on top of the problem," wrote Grassley. "Congress may have contributed to these failures. If the private debt collection program is the 'hood ornament for incompetence,' as you called it, then the IRS's failure to collect $345 billion of taxes due and owed is the Edsel of government functions."

Grassley acknowledged that the private debt collection program has been derided as costing more money than it raises for the federal treasury, but countered that IRS employees are also a "big expense" with their costly salaries and benefits. While taxpayers have complained about harassment from the three private debt collection firms contracted by the IRS, Grassley noted that IRS employees had shortcomings of their own.

He singled out the National Taxpayer Advocate's Office, which has pushed for repeal of the private debt collection program.

"Ironically, staff members in the National Taxpayer Advocate's Office were disciplined dozens of times for problems last year," wrote Grassley, adding that some of the actions involved computer security and taxpayer privacy violations. Other causes included failure to properly and timely file or pay taxes and government credit card problems.

Overall, the IRS took disciplinary action against more than 2,000, or 2.3 percent, of its employees last year. As with the Taxpayer Advocate's Office, some of the disciplinary actions did not involve taxpayer privacy or service.

"Clearly, the vast majority of IRS employees work diligently and ethically," said Grassley. "But IRS employees have occasional lapses in judgment, just like members of the population at large. I hope you and other skeptics will keep that in mind and take the time to evaluate any complaints involving the private debt collection companies in substance, in context, and in comparison to the IRS's workforce before rendering judgment that it's time to kill a program to do a job that the IRS couldn't or wouldn't."

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