On Wednesday, the House Ways and Means Committee agreed to pull the plug on the IRS's controversial debt collection program. The IRS has been contracting out a portion of its federal tax debt collection to private companies.
"The collection of taxes is a core government function," said Representative John Lewis (D-GA). "It is the Internal Revenue Service's mission. We found that, in addition to taxpayer harassment, this program wastes tax dollars by paying a bounty up to 24 percent to the debt collectors."
Prior to the private industry debt collection program, IRS debt collection was performed by IRS employees.
Colleen M. Kelley, president of the National Treasury Employees Union (NTEU), described the House committee action as a "concrete step" toward ending the private collection program.
"Revoking the IRS' authority to hire private tax collectors ensures that taxpayers will be protected from abusive collection methods and that the tax collection work of the government will be carried out in a cost-effective manner," said Kelley.
Critics of the private debt collection program have claimed that the IRS is able to collect its debts more efficiently and less expensively than the outside collectors.
In similar action, the Senate Appropriations Committee last week passed legislation signaling serious concern with the IRS private tax debt collection program by limiting funding for the initiative in the 2008 Financial Services and General Government Appropriations bill.
NTEU has been leading the fight against the privatization of the inherently governmental function of collecting taxes, and has been joined in its call for repeal of IRS authority to engage in the practice by the agency’s own National Taxpayer Advocate and by a variety of national consumer protection groups.
Along with the cost issue, NTEU and other opponents of the program have cited the serious risk to taxpayers' personal and sensitive information by putting it in the hands of private companies.