It's Tax Day and The Post Recaps IRS Private Collection Agency Program

It’s April 15 and many taxpayers are rushing to meet the deadline to file their individual tax returns. The Washington Post opted to run on its front page a story on the $37 million the IRS says it will lose on its private debt collection program.

The article recaps much of the already reported debate between opponents and proponents of the program. The story cites program opponents the National Treasury Employees Union, which represents IRS employees; Sen. Byron Dorgan (D-N.D.), who leads a group of 23 Senators who have co-sponsored a bill to repeal the program; and IRS Taxpayer Advocate Nina Olson. They point to the $100 million already spent on the program, and the fact that the private collectors have gathered only about half of that through their efforts.

Program proponents are also covered including the Tax Fairness Coalition, which represents the two participating firms, CBE Group and Pioneer Credit Recovery; and Rep. Jim Ramstad (R-Minn.), the top Republican on the House Ways and Means Committee, and Sen. Charles Grassley, an Iowa Republican. The proponents point out that much of the costs were start-up costs rather than recurring costs and expect the program to turn net positive sometime this year. They also say that the money that is recovered would go uncollected if the private debt collection program didn’t exist.

Although the Post article serves primarily to present a political take on the long-running debate over the private debt collection program, a very real threat is looming over the initiative. Last week, the House Ways and Means Committee approved a bill — H.R. 5719 — introduced by committee Chairman Charles Rangel (D-N.Y.) that contained language killing the program ("IRS Outsourced Collection Program Under Political Fire, Again," April 10). The bill could see a debate on the House floor today. Late Monday, the White House issued a statement threatening a veto of the bill if it passed the full House. The White House has previously vowed to veto similar bills killing the program ("House Votes to Kill IRS Collection Program; Veto Threatened," Oct. 11, 2007).

The Post story concludes with comments from two proponents.

Grassley told the paper, "The intense effort to game the numbers and kill this program in the cradle is noteworthy even by Washington standards. IRS officials have testified that the private debt-collection program has taught the IRS new, more effective techniques."

And Coalition spokesperson Jeff Trinca says that ending the program would send a message to certain delinquent taxpayers that the government will not pursue them. "There is a misconception that somehow or another if you just added another body to do exactly what the agency does currently, that you would collect all this debt. That’s just not the case," Trinca tells the Post.