In his fiscal 2005 budget, President Bush will once again include a proposal that would allow the Internal Revenue Service to use private collection agencies to help the government collect delinquent taxes, according to a statement released by the Treasury Department on Tuesday.
The new budget proposal will ask for a 4.8 percent increase in the IRS budget by next year. Much of the increase will focus on IRS enforcement. The budget will allot $300 million for the IRS to enforce tax laws, and would allow the IRS to use private collection agencies to “support the IRS’s collection efforts in specific, limited ways,” according to the Treasury statement.
Treasury officials estimate that the use of collection agencies would help IRS revenue to increase by $1.531 billion over 10 years.
The specific text of the release as it relates to the IRS?s use of private collection agencies follows:
Permit Private Collection Agencies to Support the IRS? Collection Efforts – The IRS? resource and collection priorities do not permit the IRS to continually pursue all outstanding tax liabilities. Many taxpayers are aware of their outstanding tax liabilities but have failed to pay them, and the IRS cannot continuously pursue each taxpayer with an outstanding liability. The Administration’s proposal would allow private collection agencies, or PCAs, to support the IRS? collection efforts in specific, limited ways. The proposal would enable Government to reach these taxpayers to obtain payment while allowing the IRS to focus its own enforcement resources on more complex cases and issues. PCAs would not have any enforcement power and would be carefully monitored to ensure that taxpayer rights are carefully protected.
10-year revenue effect: $1.531 billion.
On Jan. 7, IRS officials announced a massive restructuring plan, with plans to lay off 2,400 tax-processing employees and add more than 2,000 workers in the agency’s enforcement operations.
The National Treasury Employees Union has announced plans to fight the restructuring, and has strongly opposed efforts in the past to privatize tax collection efforts.
The Bush administration made a similar privatization proposal in its fiscal 2004 budget, and a provision on private tax collection was included in President Bush’s tax cut bill last year. But a House-Senate conference committee rejected the provision.
In October, the House Ways and Means Committee killed a proposal included in a tax bill that would have permitted private debt collection agencies to collect taxes under certain circumstances. At the time, NTEU President Colleen Kelley called the committee’s action “a major victory for taxpayers.”
