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

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