The Internal Revenue Service reported today that it has awarded contracts to two collection firms that are currently working on the tax agency’s private debt collection initiative, according to an IRS statement to insideARM.

CBE Group, based in Waterloo, Iowa, and Pioneer Credit Recovery, of Arcade, N.Y., were awarded new contracts to collect delinquent taxes on behalf of the IRS. The contracts effectively extend the participation of the two collection agencies in the program.

The contracts run for one year and have a one-year extension option. The companies were working under a similar contract that was awarded in March 2006 and extended in March of last year.

In the 2007 fiscal year, the two firms collected $31 million for the IRS.

The new contracts come at a time when the private debt collection program is under fire from U.S. legislators, consumer groups and government employee unions.

The National Treasury Employees Union, a group that represents IRS employees, issued a press release late Monday lambasting the decision as “wrong-headed” and calling the program a “a clear waste of taxpayer dollars.”

The U.S. House has also approved a bill – HR 3056 – that contains language that would remove the IRS’s authorization to hire private collection agencies ("House Votes to Kill IRS Collection Program; Veto Threatened," Oct. 11, 2007). The bill was sent to the Senate in October and is now before the Senate Committee on Finance.