The Internal Revenue Service awarded contracts to a trio of firms to participate in the first phase of its private debt collection initiative.

A total of 33 firms took part in the bidding process.

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. The law included a number of limitations to ensure the private firms will be subject to the same taxpayer protection and privacy rules that agency employees work under. The IRS expects to assign uncollected liabilities to the firms beginning this summer.

In a statement, IRS Commissioner Mark W. Everson noted the majority of states use private firms to help collect delinquent taxes and promised his agency would closely monitor contractor performance.

The IRS has developed its own guidelines for the private firms, including background checks on all firm personnel associated with the project, as well as a mandatory, IRS-directed training program for company personnel. The IRS will assign the firms cases where a taxpayer has not disputed the liability.

"Redirecting relatively simple cases to private firms will permit the IRS to focus its existing collection and enforcement personnel on more complex tax issues," Everson said.

In the second phase of the project, scheduled for 2008, the IRS plans to contract with up to 10 firms. Over the course of 10 years, the agency expects the private firms will help it collect an additional $1.4 billion in outstanding taxes.

The selected firms are:

  • The CBE Group Inc., of Waterloo, Iowa;
  • Linebarger Goggan Blair & Sampson LLP, of Austin, Texas; and,
  • Pioneer Credit Recovery Inc., of Arcade, N.Y.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access