Tax Fairness Coalition Defends IRS Private Debt Collection

The National Taxpayer Advocate recently released its 2006 Annual Report to Congress. The Tax Fairness Coalition strongly disagrees with the report’s discussion of, and recommendations regarding the IRS’s Private Debt Collection (PDC) initiative.

The report fails to recognize the value of the program, the success it has seen so far, and the complementary way in which private collection agencies (PCAs) are working with the IRS to help recover billions of dollars in unpaid taxes, thereby helping to close the ever-widening tax gap.

The tax gap is currently estimated at $350 billion and continues to grow. Over 7.4 million Americans owe delinquent taxes, but have never heard from the IRS. PCAs are working closely with the IRS to reach more of those individuals, and in doing so, are recovering vital revenue for government programs and restoring Americans’ confidence in the basic fairness of our voluntary tax system.

As the "IRS Comments" in the report point out, the PDC program collected over $8.4 million in its first 10 weeks, exceeding the target set for its initial year. This money was collected voluntarily, and all taxpayer rights and protections are firmly in place. The IRS reports that "service levels to taxpayers assigned to PCAs will meet or exceed the standards set for IRS customer service and quality." In fact, PCAs have earned quality ratings of 97 to 100 percent for customer service, compared with ratings averaging between 89.5 to 99.5 percent earned by IRS in 2006.

The report goes on to state that with the PDC initiative, "There have been no instances of fraud or misuse of taxpayer information." According to the IRS, the PDC initiative provides a way to offer a superior level of personal assistance to taxpayers. The IRS further states, "We are experiencing the benefits of the efforts of PCA employees and the thousands of contacts made on outstanding accounts." In addition, "The PDC initiative allows the IRS to ensure that more delinquent taxpayers are personally assisted with meeting their obligations". The IRS expects the program to recover $1.4 billion over a 10-year span.

The National Taxpayer Advocate clearly fails to recognize the value that PCAs are affording the IRS. PCAs employ thousands of American citizens and play a vital role in the U.S.economy. For decades, PCAs have partnered with government agencies at the local, state and federal level to professionally and efficiently recover past due government debts.

The Tax Fairness Coalition represents the agencies selected by the IRS to help recover billions of dollars in unpaid taxes. The group is committed to helping the IRS close the tax gap, and returning those funds to the U.S. Treasury so they can pay for critical investments in areas such as education and health care. The Coalition believes the collection of overdue taxes is about fundamental fairness, to the vast majority of Americans who pay their taxes on time and as required by law, as much as it is about dollars and cents.