IRS to Hire Private Collection Agencies to Collect Unpaid Taxes

The Wall Street Journal today reported that the Internal Revenue Service is considering the use of private collection agencies. The IRS has requested help from some agencies to help design a plan for private collection agencies to go after as much as $50 billion of the more than $200 billion in back taxes owed.

A draft of the plan could be put together as early as next month, with collection activity starting late next year according to officials. It is still undecided whether bill collectors should be paid a flat fee or a percentage of the taxes collected.

Pamela Olson, assistant Treasury secretary for tax policy, according to the Wall Street Journal, said "Obviously the [IRS] has an obligation to make sure we're doing everything we can to collect debts on the books" and "To the extent we're not getting it done we ought to look at other options."

The General Accounting Office estimates that at least $20 billion in unpaid taxes is readily collectible. A PricewaterhouseCoopers study, commissioned by DCS Inc., a private collection company in San Leandro, Calif., estimates that as much as $50 billion could be collected over the next 10 years.

Allied Interstate Inc., of Minneapolis, a unit of Columbus, Ohio-based Intellirisk Management Corp., and GC Services LP of Houston, are also expected to bid on the work.