IRS shouldn’t hire private debt collectors

May 25, 2014 

The United States Internal Revenue Service isn’t particularly loved — or even liked.

Could it get worse?

It just might if a proposal in the U.S. Senate is approved.

The legislation would require the IRS to turn over millions of unpaid tax bills to private debt collectors.

Really? That approach has already been tried as a way to collect full payment of taxes and it was a failure.

During the most recent attempt, from 2005 to 2009, the government lost money. IRS information shows that private agencies collected about $98 million, of which they received $16.5 million in commissions, according to The Washington Post. The IRS spent $86 million to administer the program, including attempting to protect sensitive personal information from the contractors. That’s a net loss of $4.5 million.

Another go-round isn’t likely to do anything more than, perhaps, break even.

And why? To drum up ill will toward the IRS and general hatred of the government?

No, the plan seems to be a way for a senator to look out for businesses in his state. It’s old-fashioned pork-barrel politics.

Mandating private debt collections was a provision tucked into a larger piece of legislation renewing expired tax breaks. This request was made by Sen. Charles Schumer, D-N.Y., whose state is home to two of the four private collection agencies that would profit from the plan.

This proposal will do more harm than good. It could spur an emotional backlash by the public.

For example, according to The Post, bereaved relatives could find themselves hounded for unpaid estate taxes under the proposal. The effort also could stir up a political firestorm over the already controversial Affordable Care Act. Some people could become tax cheats without even knowing because they owe the penalty fee for not buying mandated health insurance. Others could be stung because the IRS overestimated their health care tax subsidies, and now wants them back. Probably easier said than done in most cases.

Now, we are in no way advocating letting people slide on paying taxes. But the job of collecting owed taxes should be done by the government that can be held accountable for the approach taken.

Private debt collectors can approach their work with an unbridled zeal ignited by the commission — or bounty. For private debts, that’s fine.

But those private companies don’t answer to millions of taxpayers (and voters).

Keeping tax collections in-house might not be the most effective way to get debts paid, but it is the most prudent approach given the sensitive personal information involved and the oversight that can be provided by its bosses — the American people.

Walla Walla (Washington) Union-Bulletin

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