IRS Eliminates Debt Collection by Private Agencies
IRS Eliminates Debt Collection by Private Agencies
By MARTIN VAUGHAN
WASHINGTON — The IRS said late Thursday it will discontinue a controversial program, in place since 2006, that outsourced the collection of some tax debts to private agencies.
The two contracts the IRS currently has with private debt collection agencies are set to expire Friday.
“After a thorough review of this program, I have decided not to renew the contracts,” IRS Commissioner Doug Shulman said in a statement. “I believe this work is best done by IRS employees, and I believe we have strong support from the Administration and the Congress for increased IRS enforcement resources going forward.”
The statement also said that IRS employees have greater “flexibility handling cases, which is particularly important with many taxpayers currently facing economic hardship.”
Mr. Shulman noted that IRS plans to hire 1,000 additional collection personnel in 2009, which will help the agency’s efforts to collect outstanding debt.
Congressional Democrats have long vowed to dismantle the program, which was put in place in 2006 under the Bush administration and a GOP-controlled Congress. They charge that the program outsources a core government function and that it has had a poor record with taxpayers. House Democrats included a provision to end the private debt collection program in an omnibus spending bill the House passed last week.
“I applaud Commissioner Shulman’s decision to end the private debt collection program,” said House Ways and Means Chairman Charles Rangel (D., N.Y.). “American taxpayers deserve to work with the trained professionals from the IRS to work through any issues they have.”
Mr. Shulman was careful to note that the decision wasn’t a judgment on the performance of the private agencies, which performed according to their contracts, he said.
Sen. Charles Grassley (R., Iowa) blasted the decision, saying the IRS didn’t make enough of an effort to find out whether the program could be effective and how it could be improved. He said in a statement that the decision was due to “union-driven political pressure” from the National Treasury Employees Union.
“The administration has decided that after spending nearly a trillion dollars in the stimulus bill to keep people working across the country, they are going to cut a program that provides jobs to hundreds of people during the middle of a recession, including 60 in Iowa,” Sen. Grassley said in a statement. “It’s hard to believe that after worrying so much about keeping people employed, the administration has chosen this route.”
Write to Martin Vaughan at martin.vaughan@dowjones.com
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