The trio of private debt collection agencies that the Internal Revenue Service selected for a pilot program will soon be able to come knocking. The agency was due to turn over data on 12,500 taxpayers - each owing $25,000 or less in back taxes - toward the end of August.To assist the agency in collecting back taxes, the 2004 American Jobs Creation Act authorized the IRS to hire private firms to collect federal tax debts. IRS Commissioner Mark Everson has openly 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 Congress has been cutting.

The privatized program is outside the budget rules because, except for the start-up costs, the collectors will be paid from the proceeds.

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