It’s been a number of years since St. Matthew functioned as the official publicanus in Judea, where he paid the taxes for his territory and subsequently went to recover his outlay – and then some – by personally collecting taxes from the citizenry in what may be one of the earliest examples of privatization.

Fast-forwarding about 23 centuries, the debate over whether to outsource tax collection, or bolster the ranks of the Internal Revenue Service to keep that function in-house, has hit the House floor, as lawmakers have approved a bill that would ban the use of private tax collectors.

To exactly no one’s surprise, the issue has cut a wide swath through Capitol Hill.

The White House has threatened to veto the legislation, maintaining that the use of private collectors under the program that began in 2004, could help bring in more revenue in the ongoing push to narrow that $300 billion Continental Divide known as the tax gap.

According to recent statistics, the private collection program garnered roughly $32 million since 2006 with about $5.5 million of that figure going to the collection agencies.

While the bill passed by 59 votes in the House, its fate in the Senate remains unknown.
Chuck Grassley, R-Iowa, ranking member of the Senate Finance Committee however, has some definite ideas on its future labeling the bill as DOA when it arrives on the Senate floor.
Grassley accused the House legislation of being  something that attempts to “stop a program that is already working.”

Ironically, the skirmish over the public vs. private debate comes on the heels of a Government Accountability Office report that chronicled the IRS’ difficulties in managing its paper case files.
The auditor general concluded that the IRS has not had a very good process in place to ensure that case files be located within the times frames of those who requested them.

The report also found that in several cases in District Court, the IRS lost over $40,000 in revenue per case because the files couldn’t be located. In fact, two prior GAO audits stated that the IRS couldn’t locate some 10 to 14 percent of the case files requested.

Although the GAO report on the IRS’ difficulties with case files is a bit tangential to the private-collection debate, it does highlight a number of problem areas that would have to be rectified in order to convince proponents of privatization that the Service is properly equipped to handle collections on its own.

More and better-trained personnel would be a good place to start.

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