The Internal Revenue Service (IRS), last week awarded contracts to three firms, the CBE Group Inc. of Waterloo, Iowa, Linebarger Goggan Blair & Sampson, LLP of Austin, Texas, and Pioneer Credit Recovery, Inc. of Arcade, New York, from a field of 33 firms, in the first phase of its private debt collection initiative.
“The vast majority of states use private firms to help collect delinquent taxes. The new authority Congress gave to the federal government allows us to use private firms as well,” IRS Commissioner Mark W. Everson said in a prepared statement. “We have carefully considered all of the concerns expressed about this project, which involves work traditionally done by the government. As a result, we are putting tough safeguards in place to protect taxpayer rights and privacy. We will be closely monitoring contractor performance to make sure they’re following the law, as well as our own internal standards.”
The three firms have been selected to participate in a two-year “Limited Implementation Phase” of the IRS Private Debt Collection Initiative. The IRS received authorization to hire private firms to assist the agency with the collection of back taxes by the 2004 American Jobs Creation Act. The applicable portion of the law was carefully crafted to ensure private firms will be subject to the same stringent taxpayer protection and privacy rules that IRS employees work under and to ensure the private firms cannot subcontract the work. In addition to these safeguards, the IRS has developed specific guidelines for the private firms, including background checks on firm personnel associated with the project and a mandatory, IRS-directed training program for company personnel.
“I’m thrilled that we’re able to bring more job opportunities to the State of Iowa,” Tom Penaluna, CBE Group’s President, CEO and owner said in a statement announcing the contract. “We have prepared for this growth for several years now, and the entire CBE team is very excited about where this company is going.”
The private firms will not be authorized to take enforcement actions such as liens, levies or seizures, nor will they be authorized to work on technical issues such as offers in compromise, bankruptcies, hardship issues or litigation. The private firms will be assigned by the IRS to cases where the taxpayer has not disputed the liability and will contact taxpayers to make payment arrangements.
“The IRS contract represents an opportunity for CBE to assist the federal government in recovering unpaid taxes and achieving public policy goals,” Penaluna said. “We are committed not only to contributing to the success of the Limited Implementation Phase, but also to working with the other private collection agencies selected to identify lessons learned and lay the foundation for the Full Implementation Phase, which is currently scheduled to begin in two years.”
In the second phase of the initiative, which is scheduled to begin in 2008, the IRS intends to contract with up to 10 firms. Over the course of 10 years, the IRS expects to collect an additional $1.4 billion in outstanding taxes.