ACA International Responds to Recent Congressional Activity

MINNEAPOLIS, MN ? On Sept. 15, the United States House of Representatives adopted an amendment to an appropriations bill, which would prohibit the U.S. Treasury Department from allocating funds for the Internal Revenue Service?s (IRS) proposed program to contract limited federal tax collection activities to third-party debt collectors. Earlier in the summer however, both the U.S. House and Senate indicated support for the proposed IRS program by including authorizing language into a large overhaul tax bill, which is currently moving through the legislative process. Although ACA International (ACA) was disappointed by the House amendment last week, it firmly believes that Congress will authorize the proposed IRS program by the end of this year.

“On behalf of the credit and collection industry, ACA has been closely monitoring the developments on the proposed IRS program over the past few years,” said Rozanne Andersen, ACA Senior Vice President of Legal and Government Affairs. “We fully support the proposal and will continue working with our congressional and regulatory allies to ensure it is enacted.”

The IRS and the Government Accountability Office (GAO) have documented significant declines in the compliance and collection activities of the IRS over the past several years. In 2002, the GAO reported a 60 percent gap between the IRS collection workload and the amount of work that agents were completing. This “gap” translates into $280 billion in unpaid federal income taxes – $120 billion of which is potentially collectible, and $20 billion categorized as readily collectible. As this staggering backlog of cases continues to grow, the IRS is deferring collection activity on one out of every three cases.

A former IRS Commissioner reported in September 2002, that 5,450 new full-time employees at a cost of $296.4 million would be required to collect on the outstanding federal income taxes. The private debt collection industry can assist the IRS and its current employees by performing certain limited services, to locate and request payment of taxpayers who are likely to remit their past due taxes when contacted.

“The time has come for the IRS to follow the lead of several federal agencies and 40 state governments already successfully utilizing the services of the private sector,” said Andersen. “The IRS must take advantage of the credit and collection industry’s state-of-the-art technology and professional expertise to reduce the casework backlog and bring owed tax dollars into the Treasury.”

“ACA believes that through a careful and successful partnership between the IRS and third-party debt collectors, as outlined in the IRS’ current program design, the taxpayer will be the winner,” said Andersen. “Taxpayer fairness will be restored, as collection efforts can be implemented in a timelier manner, reserving the considerable expertise of the IRS employees to handle complicated tax cases. Private agencies could perform certain functions for the IRS, which are regularly performed in the private sector in a very efficient manner, reducing the ever growing backlog of unpaid taxes.”

ACA International, formerly known as the American Collectors Association Inc., is the association of credit and collection professionals. Founded in 1939, ACA International has approximately 5,300 members, including third-party collection agencies, attorneys, credit grantors and vendor affiliates. Headquartered in Minneapolis, ACA International serves members in the United States, Canada and 58 other countries worldwide. For more information visit our new Web site at www.acainternational.org.