Five Reasons to be Wary of Private Tax Collection

It’s not Halloween yet, but there’s already something very scary lurking that just won’t die—private tax collection. (as posted on NETU National Website)


The IRS announced it has contracted with four private collection agencies (PCA) to collect unpaid tax debt. If this sounds familiar, you’re right, the IRS has tried it before. Two previous attempts in the past 20 years ended in failure and wasted millions of taxpayer dollars. So why is this doomed program back? After a five-year break, a highway bill Congress passed last year included a provision requiring the IRS to outsource tax collection.

NTEU opposes this program, Here are five reasons why you should too:

  1. The program was a bust.  The 2006–2009 program was projected to bring in up to $2.2 billion in unpaid taxes. Instead, there was a net loss of almost $4.5 million to the federal government, after subtracting program administration costs of $86.2 million and more than $16 million in commissions to the PCAs. What’s more, the program was found to disproportionately target low-income taxpayers.
  2. There are IRS employees being laid off who can do the work. More than 7,000 employees are slated to lose their jobs at sites that process paper tax returns. There’s no need for Congress to outsource this work when there plenty of longtime federal employees who can be retrained to do it.
  3. IRS employees can help taxpayers in ways contractors can’t. Private collectors want to get paid as much and as soon as possible, while IRS employees have a variety of tools to help financially-struggling taxpayers. They include postponing or temporarily suspending debt collection, setting up flexible payment arrangements and waiving late-payment penalties.
  4. The program creates confusion exposing taxpayers to trouble. Telephone scams are increasing in number with fraudsters calling taxpayer pretending to be the IRS. The IRS never cold calls taxpayers but the PCAs will be making calls to taxpayers creating confusion.
  5. NTEU is in good company in its opposition. Opposition to the program has been voiced by a growing number of members of Congress, major public interest groups, tax experts, newspaper editorial boards as well as the Taxpayer Advocacy Panel, a volunteer federal advisory group—whose members are appointed by the IRS and the Treasury Department.

Tell Congress today that there are clear advantages to having IRS employees do tax collection work.