The IRS and Private Collectors? More Please

by Patrick Lunsford, CollectionIndustry.com

In the never-ending saga of the IRS using private collection agencies to collect taxes, an entry from the New York Times made its way into the debate this weekend. The Gray Lady ran a piece on Sunday announcing the start of the program and pointing out various facets of the debate that have been overshadowed by the often emotional response to the program.

The article was factually fair and even-handed, but it did focus on the negative aspects of the initiative far more than the positive. A central theme was a rejected proposal by former IRS commissioner Charles Rossotti. In 2002, Rossotti argued that by spending $296 million on additional revenue officers, the IRS could bring in an additional $9 billion per year; far more than the $1.4 billion over 10 years the private collectors are expected to bring in. Lost in the dramatic juxtaposition of numbers was the fact that the $1.4 billion brought in by private collectors will be exclusive to the program ? it does not include the benefit of freeing up current IRS agents to go after higher-dollar cases, the kind that Rossotti?s additional officers would have been working on.

Unsurprisingly, the program?s main opponent, the National Treasury Employees Union, jumped at the chance to re-inject themselves into the debate. They issued a press release Monday basically stating that their necks were hurting this morning from agreeing with the Times? piece so much.

The IRS is set to distribute 12,500 cases to three collection agencies in about two weeks. All of the cases will involve debts less than $25,000.