The controversial use of private debt collectors by the Internal Revenue Service may be little more than a stopgap to make up for the service's lack of funding to hire its own personnel - while opponents charge that the initiative is expensive and risks exposing taxpayer's privacy.In a recent report to Congress, National Taxpayer Advocate Nina Olson, a fierce critic of the strategy, said that contrary to the government's rationale, use of private collectors is not cost-effective, the cases assigned are not the promised "easy" cases, and the IRS is substantially different from other federal agencies that use private collectors.
As part of the American Jobs Creation Act of 2004, Congress gave the IRS the authority to use private debt collectors to collect certain tax debts, in part to help shrink the massive tax gap of just under $300 billion. In September, the IRS began assigning taxpayer accounts to the PDCs despite opposition.
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