Taxpayer advocate calls for end to IRS tax privatization program

Just a day after a key House committee voted to repeal the Internal Revenue Service tax debt privatization program, the agency's own National Taxpayer Advocate has once again sharply criticized the program and called for an end to it.

In a report to Congress on the fiscal 2008 objectives of her office, Taxpayer Advocate Nina Olson called the collection of taxes "an inherently government function, which should only be undertaken by IRS employees trained to protect taxpayer rights."

She added: "(T)he money spent on the IRS's private debt collection initiative is an inefficient use of government dollars, as IRS collection employees can collect more delinquent tax dollars at a lower cost to the government."

Olson, who has previously urged repeal of IRS authority to hire private debt collectors, noted the agency's Automated Collection System currently collects about $20 for every $1 spent on staffing, while the private debt collection initiative is estimated to return only $4 for every dollar spent.

Among other issues, Olson undercut the argument advanced by supporters of the privatization effort that, because the IRS is not able to pursue every case in its collection inventory, private companies are at least bringing in revenue that otherwise would be untouched.

Not so, Olson told Congress. "By improving its collection strategy and use of currently available resources, including better research," she said, "the IRS could reach most, if not all, of these cases at less cost to U.S. taxpayers and less risk to taxpayer rights."

The Taxpayer Advocate's continued opposition to the program was welcomed by President Colleen M. Kelley of the National Treasury Employees Union (NTEU), who has been leading the fight against the privatization of tax collections.

"Nina Olson offers an important perspective on behalf of our nation's taxpayers that should be heeded," President Kelley said. "Her often-repeated concerns about this program have helped raise congressional and public awareness of both the costs involved and the inherent risks in turning taxpayers' personal information over to the debt collection industry."

Last week, the House Ways and Means Committee approved the Tax Collection Responsibility Act of 2007, which would repeal the agency's authority to hire private collectors. That action came after a May hearing in which the committee identified publicly a variety of serious problems with the program, including abusive collection tactics.

Related stories:
House Ways and Means Committee votes to stop IRS debt collection program
IRS Budget continues path through Congress

You may like these other stories...

As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...
OECD calls for coordinated fight against corporate tax avoidanceDavid Jolly of the New York Times reported that dozens of countries with the most advanced economies have agreed on principles for concrete action to prevent...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.