ACA International: GAO Report Provides Further Proof of Need for PDC-IRS Partnership

WASHINGTON, D.C. – The U.S. Government Accountability Office recently released a report confirming what has long been obvious to members of the credit and collection industry– the IRS doesn’t do debt collection nearly as well on its own as it does when partnering with professional debt collectors.

In a long, well-chronicled battle the past few years, the IRS broke away from a productive partnership with private debt collection agencies in an effort to do its own debt collection on past-due taxes. The GAO’s report, titled, “IRS Needs to Better Manage the Collection Notices Sent to Individuals,” gave a detailed summary of the IRS’s failures in the early stages of debt collection efforts.

Sen. Charles Grassley (R-IA), ranking member of the Committee on Finance, didn’t mince words in reacting to the report.

“The IRS and some members of Congress rushed to cancel the private debt collection program, arguing that the IRS can do the job,” he said in a press release. “Meanwhile, the tax gap is $345 billion a year. [This] report shows the IRS’ ways of collecting taxes are wasting money and not getting the job done. The IRS is not capitalizing on the easiest way to close the tax gap and is losing billions of dollars in the process.”

Local, state and federal governments have long outsourced to professional debt collection agencies everything from overdue parking tickets to state taxes to the collection of federal student loans. In 2007, private collectors recovered an estimated $721 million for government entities.

“This is a proven partnership that works well,” said Adam Peterman, Federal Government Affairs Director for ACA International, a trade association representing more than 3,500 debt collection agencies across the United States. “Not only do our members help local, state and federal government entities recover past-due debts, but as leaders in the industry we are able to ensure that consumer privacy and information are protected as part of the process.”

Peterman said members of ACA International would welcome the chance to once again partner with the IRS on collecting back taxes.

“Back in 2004, the American Jobs Creation Act authorized the IRS to contract with private collection agencies, and we really felt that this promising program was already delivering great results despite being in its infancy,” he said. “Debt collection is what our members know better than anyone, and in a time when the federal government is in dire need of revenue, it should be utilizing each tool at its disposal.”

About ACA International
ACA International, the Association of Credit and Collection Professionals, is the comprehensive, knowledge–based resource for success in the credit and collection industry. Founded in 1939, ACA brings together more than 5,500 members worldwide, including third–party collection agencies, asset buyers, attorneys, creditors and vendor affiliates. The association establishes ethical standards, produces a wide variety of products, services and publications, and articulates the value of the credit and collection industry to businesses, policymakers and consumers.