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GCN Home > 01/09/07 web stories

National tax advocate urges IRS to drop private tax collectors

By Mary Mosquera, GCN Staff

The IRS national taxpayer advocate told Congress that it should repeal the IRS’ authority to contract out collection of federal tax debt. National taxpayer advocate Nina Olson listed the Private Debt Collection program as one of the 21 most serious problems for taxpayers.

The IRS expected the Private Debt Collection program to be cost effective and work only on simple cases.

“The IRS now acknowledges that it can collect these delinquent accounts more efficiently than PCAs (private collection agencies),” Olson said in the report released today.

Overall, the alternative minimum tax for individuals and the federal tax gap are the most serious problems facing taxpayers, Olson said. The report focused on concerns about IRS collection policies and the transparency of IRS information.

The revenue benefits of the Private Debt Collection program are limited, and the potential for taxpayer rights violations is significant, Olson concluded. Three contractors have collected tax debts since September.

Private tax collectors do not always follow rules that apply to IRS employees but maintain operational plans and calling scripts that describe such things as psychological techniques to coax debtors into paying, Olson said. The scripts are considered proprietary information that Olson’s office was not permitted to disclose.

The leader of the union representing IRS employees repeatedly has called for IRS to drop the program.

“Paying debt collectors a bounty of up to 25 percent of the money they collect is a waste of taxpayers’ dollars and exposes taxpayers to the risk of identity theft and overly aggressive collection tactics,” said Colleen Kelley, president of the National Treasury Employees Union.

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