Democrats Send Letter to Obama Calling for IRS Private Collection Shutdown

Some Democratic members of the U.S. House’s Ways and Means Committee sent a letter to President-elect Barack Obama Tuesday urging him to shut down the program that allows the Internal Revenue Service to use private debt collection agencies to recover back taxes.

Fourteen members of the committee, including its chairman and the head of its Oversight Subcommittee, signed the letter that argued collecting taxes was an inherently governmental function and that “in light of the current economic situation, it is important that the administration protect taxpayers by ensuring that they deal with the IRS directly to work through any difficulties.”

But Jeff Trinca, a representative of a group that lobbies in favor of continuing and expanding the program, said that given the current economic situation, the incoming administration should work to expand the program rather than kill it.

“Budget deficits are going to reach a record this year,” Trinca told insideARM. “If this program was fully-implemented, it could generate as much as $1 billion a year for the IRS within a couple of years.”

Trinca said that critics and decision makers on Capitol Hill and in the executive branch should look no further than the Department of Education’s private collection program for an example of successful government accounts receivable management.

ED’s current collection contract, awarded in 2004, includes 17 collection agencies. In the 44 months they have been collecting for the department, the collectors have brought in $4.67 billion ("Shakeup at Top of ED Debt Collection Competition in October ," Nov. 25).

The IRS contract, by contrast, includes just two collection agencies: CBE Group and Pioneer Credit Recovery. Initial plans called for the IRS to expand the program to 10 agencies last year, but those plans were scrapped under intense opposition from the National Treasury Employees Union and the Taxpayer Advocate.