Collectors Cost IRS More Than They Raise

[Demeter]

Source: Washington Post



The Internal Revenue Service expects to lose more than $37 million by using private debt collectors to pursue tax scofflaws through a program that has outraged consumers and led to charges on Capitol Hill that the agency is wasting money for work that IRS agents could do more effectively.

Since 2006, the agency has used three companies to go after a $1 billion slice of the nation's unpaid taxes. Despite aggressive collection tactics, the companies have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program. The debt collectors have pocketed commissions of up to 24 percent.

Now, as Americans file their 2007 taxes, Democratic leaders want to end the effort.

"This program is the hood ornament for incompetence," said Sen. Byron L. Dorgan (D-N.D.), a leading critic who has introduced a bill to stop the program. The measure has 23 co-sponsors, all but one of them Democrats. "It makes no sense at all to be turning over these tax accounts to private tax collectors that end up costing the taxpayers money."

Read more: http://www.washingtonpost.com/wp-dyn/content/article/20...

[MADem]

1. ...the hood ornament for incompetence

Heh, sounds like Dorgan!

I do wish HE'D get a new hood ornament, though...that head of his is distracting!

[KarenS]

2. ohgoodgrief,,,, K&R n/t

[bullimiami]

3. so its another program functioning as planned. to transfer govt money to the connected.

[mainegreen]

4. but, but, but, privatization is so effective.

Honestly! The man on AM radio told me so!

[Tellurian]

5. Unemployment for what it is... eom

[Wickerman]

6. Blood from turnips, anyone?

Of course the IRS is going after the little guy these days and not pursuing the major tax cheats, i.e., corporations.

That said, this is another mission accomplished moment. Bush's friends get rich once again demonstrating that the "inefficient government" can run rings around them.

[pattmarty]

7. And that is a perfect example of in the rush to privatize...............

........everygodamnthing, I would be willing to bet (AND I am not a gambling person) that if you look at ALL the programs that have been privatized over the years, that a large majority of them you would find the same thing.

[evilkumquat]

8. Private Debt Collection Could Work for Taxes

Ten years ago, I managed a collection agency that handled collecting delinquent county taxes. Within a couple years, we had managed to collect over $100,000, much of it from cases that were almost beyond the legal ability to collect through the ten-year statute of limitations. Quite frankly, as a private collector, we had better access to resources the local government did not.

There was no way whatsoever for us to have cost the county more in collections because everything we collected was on a commission: if we collected zero dollars, the county paid us zero dollars. We only got paid if the county paid.

I guess the collection agencies' contracts with the IRS are structured a bit differently?

Oh, and in this extremely Red county of this extremely Red state in which I live, my company lost the collections contract once we started going after local attorneys and governmental officials who were delinquent.

[FatDave]

9. Another privatization success story.

[snot]

10. Last I heard, the gov't used to do a VERY cost-effective job of it.

Then the Repubs got in power; they didn't like the IRS going after the big fish, so they cut funding for collection/enforcement (similar treatment for the SEC and other regulators).