The Internal Revenue Service (IRS) released its quarterly update to congress on the Private Debt Collection Program (PDC Program) implemented last year. The report shows the financial progress made by the PDC Program since its inception. It provides a year-by-year comparisons of data such as total revenue, costs of the program, and the program's overall balance (revenue less costs). The report also breaks down performance by each of the four Private Collection Agencies (PCAs) contracted for the PDC Program: CBE Group, ConServe, Performant, and Pioneer.

According ot the report, the program balance significantly increased between FY 2017 and FY 2018. FY 2018 shows a program balance of $51,059,024, compared to -$13,454,200 in FY 2017.

In FY 2018 (through September 30), the PCAs received an almost equal amount of inventory, roughly 150,000 tax receivables each. The dollar value of the receivables placed with the agencies was roughly similar with a spread of about $5 million between the highest total amount and lowest total amount placed.

IRS Q3 FY2018 PDC Report - PCA Placements

All four PCAs had a significant increase in dollars collected in FY 2018 compared to FY 2017. Similar to the results reported last quarter, CBE Group led the pack with the highest amount of total dollars collected and the highest number of installment agreements entered into.

IRS Q3 FY2018 PDC Report - Dollars Collected

IRS Q3 FY2018 PDC Report - Installment Agreements

The overall cost of the program increased by roughly $11 million. FY 2018 total direct and indirect costs were $31,133,702, compared to $20,036,145 in FY 2017.

Senator Chuck Grassley (R-IA), who backed the PDC Program, issued a press release on the success of the program stating:

Letting those who shirk their tax responsibilities off the hook isn’t fair to law-abiding taxpayers who do pay their taxes. I’m glad this program is helping make the system fairer for those who fulfill their civic responsibility and follow the law... The IRS private debt collection program continues to prove its value. The most recent data again shows that revenue returned to the U.S. Treasury exceeds all associated program costs. That’s something we don’t often see here in Washington.

insideARM Perspective

The IRS attempted to implement similar programs on two prior occasions. Both times, the programs resulted in a financial net loss to the government. The 1996 pilot program resulted in a $17 million net loss and was cancelled after 12 months. The 2006 initiative resulted in a $20.9 million net loss.

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The IRS’s third attempt appears to be going much better. Some of the lift in revenue and costs for 2018 might be because placement of accounts began in April 2017, which means a late start for the FY 2017 statistics. However, as noted last month in the Treasury Inspector General for Tax Administration’s (TIGTA) report, the PCAs appear to be doing well even with certain hurdles placed by the IRS’s administration of the program. The latest quarterly report, much like the report from last quarter, indicates that the current program’s direction is much more profitable than the prior attempts.

It appears the third time may be the charm.


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