GAO Report Blasting IRS Efficiency Could Help Private Collection Program

A recent report by the Government Accountability Office found that the IRS’s process for handling paper case files is fraught with inefficiencies, a fact that supporters of the IRS private debt collection program seized on to support their case.

The GAO released its report, "Tax Administration: The Internal Revenue Service Can Improve Its Management of Paper Case Files," late last month. In it, two IRS watchdog groups found that the tax agency cannot locate between 10 percent and 19 percent of paper files that are requested.

In two recent GAO audits the IRS could not find 10 percent to 14 percent of requested files, while the Treasury Inspector General for Tax Administration, in a similar study, did not receive 19 percent of files it requested. The GAO noted that IRS at times takes on added costs to recreate lost files and in some cases burdens taxpayers by requesting additional information during that process.

Sen. Charles Grassley, ranking member of the Senate Finance Committee and one of the main supporters of the IRS private debt collection initiative, released a sharply-worded statement Friday admonishing the IRS and pointing out that the report ran counter to arguments against using private collectors.

"The findings are very troubling. The GAO and TIGTA are finding that the IRS cannot locate between 10 percent and 19 percent of paper files that are requested. The inability to find paper case files translates into lost revenue, increased taxpayer burden and limits the IRS’ work, according to the GAO...Even worse, the report comes a day after the House voted against private contractors assisting the IRS in its work on debt collection. Time and time again, we heard on the House floor lawmakers say no private contractor could match the IRS’ work. Where are those lawmakers now to defend [the] IRS?” the Iowa Republican said in the statement.

A bill to kill the program passed the House last week (“House Votes to Kill IRS Collection Program; Veto Threatened,” 10/12) and Monday was referred to the Senate Finance Committee under threat of Presidential veto.

The bill hasn't been scheduled for consideration by the committee. A spokesperson for the Senate Finance Committee told insideARM.com that all bills require “at least 48 hours notice” before a hearing. 

Supporters of the program expect the Senate to be friendlier than the House. Randall Kamm, vice president of government services at CBE Group and co-chair of the Tax Fairness Coalition, a collector's lobbying group, told insideARM.com that the coalition aims to “change the perception of the program in the media and among Congress."

Kamm said that the Senate will be taking a harder look at the program’s performance before deciding how to vote. “We hope that we’ve gotten through the rhetoric and can now get down to the hard facts on the program,” he said.