Senator Defends IRS Private Debt Collectors After GAO Report

The Government Accountability Office late last week released a report on IRS debt collection efforts detailing the agency’s failing in properly notifying delinquent tax payers. A prominent Senator publicly noted that the IRS is floundering after cancelling its private debt collection initiative.

A report issued last week by the GAO, “TAX DEBT COLLECTION: IRS Needs to Better Manage the Collection Notices Sent to Individuals,” noted that the “IRS lacks documentation for and evaluations of its business rules for notices to individuals to assure that the collection notice phase is achieving desired results.”

The GAO was evaluating how efficiently the IRS uses the notification phase of its collection process, the first phase in the process.

Senator Charles Grassley (R-Iowa), Ranking Member of the Senate Finance Committee, said in a statement Monday, “The IRS and some members of Congress rushed to cancel the private debt collection program, arguing that the IRS can do the job. Meanwhile, the tax gap is $345 billion a year. Today’s report shows the IRS’ ways of collecting taxes are wasting money and not getting the job done.”

The IRS in March of this year, with the backing of many members of Congress, opted against renewing the contracts of two debt collection agencies that were helping to recover back taxes (“IRS Kills Private Debt Collection Program,” March 6). A popular argument at the time was that the IRS could more efficiently collect taxes using internal resources, rather than relying on private sector expertise.

Grassley was a longtime supporter of the IRS private debt collection program; one of the firms collecting on the contract, CBE Group, is headquartered in his state.

The report issued last week by the GAO was written at the request of the Senate Finance Committee and was addressed to Grassley and committee chairman Max Baucus (D-Mont.)