MINNEAPOLIS, MN – Despite being passed with broad bipartisan support last fall, a measure designed to preserve taxpayer equity and aid the Internal Revenue Service (IRS) in recovering some $280 billion in past due taxes is being threatened by a recently proposed House bill.
Reps. Rob Simmons (R-Conn.) and Chris Van Hollen (D-Md.) have sponsored H.R. 1621, which would disallow the IRS from contracting with private collection agencies (PCAs) to cure its astounding backlog of tax cases.
In a letter to Congress last week, ACA International, the Association of Credit and Collection Professionals, urged lawmakers to preserve the IRS contracting program and protect taxpayer fairness. ?The equity of our tax system is at risk,? said ACA General Counsel Rozanne Andersen. ?To expect Americans to comply by paying their fair share, you have to give them confidence that their neighbors and business competitors are doing their part, too.?
The IRS itself has been among the strongest supporters of the PCA contracting program, recognizing the need for a more efficient solution to improve collection outcomes. While an estimated $76 to $112 billion is considered collectable, millions of uncontested cases sit untouched by IRS agents due to workload backlogs.
Contrary to the concerns of H.R. 1621, the IRS expects that working with PCAs will increase taxpayer satisfaction by 12.5 percent. The IRS will use a competitive bidding process that rewards collectors for their responsiveness and sensitivity in dealing with taxpayers.
The program is also careful to protect privacy of taxpayer information. Agencies under the contract will be provided with only the name, phone number, address, the tax year and the amount of taxes due for the taxpayers they will contact. The IRS already successfully administers more than 900 outsourcing contracts that require the protection of taxpayer privacy.
As for efficiency, the program will generate $4.60 in revenue for every dollar in cost, compared to the $4.10 yielded by its own employees, the IRS said.
For decades, PCAs have partnered with government agencies at the local, state and federal level to professionally and efficiently recover past due government debts. In 2004 alone, PCAs under contract with the Dept. of Education, Dept. of Health and Human Services and the Treasury had referrals of $18.3 billion. The PCA program has worked so well for these federal agencies that IRS officials proposed they be allowed the same opportunity to utilize the private debt collection sector.
According to IRS Commissioner Everson?s testimony before Congress on April 14, 2005, the IRS plans to award contracts in June 2005, and begin an initial limited roll out of accounts to PCAs in January 2006.
