IRS Private Collection Earns Passing Mark & Controversy

A much-debated program to use private companies to collect unpaid taxes has been given a generally positive assessment by a Treasury Department auditor.

Even so, an employee union and some members of Congress are hoping to end the Internal Revenue Service program before it expands as planned later in the year, Government Executive magazine reported.

"Overall, the IRS has taken proactive measures to effectively develop and implement the program," J. Russell George, Treasury inspector general for tax administration, wrote in his audit report. IRS training, background checks and performance oversight for contractors was considered satisfactory.

He added that “a small number of issues” still need to be addressed. He recommended stronger assurances that contractors meet standards for computer security and professional conversations with taxpayers, through the use of prepared scripts, for example. One of the three contractors hired by the IRS kept tax information on a computer server shared with four other company clients, the report said.

The National Treasury Employees opposes the program, saying that if the IRS were able to hire additional staff, the agency could do the job cheaper than contractors.

"This report is rife with alarming examples of data security lapses," union president Colleen Kelley told USA Today. "I find it shocking that the IRS' response is that it will address these security lapses in the next round of contract negotiations since this month the IRS renewed two contracts for a full year."

At the same time, U.S. Rep. Charles Rangel, (D-NY), who chairs the House Ways and Means Committee, has launched an investigation into accusations of improper conduct.

"We understand that there have been numerous complaints from taxpayers about the tactics used by contract employees and instances of violation of law . . . we are aware of one serious violation of law that the IRS complaint panel has validated," Rangel wrote in a March 22 letter to IRS Commissioner Mark Everson, Government Executive reported.

The pilot program includes two private firms, which have collected about $14.5 million in gross revenues, the Associated Press reported. IRS officials want to expand the program to include up to 10 more companies, but Rangel has urged Everson not to issue additional contracts.

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