The National Taxpayer Advocate, an independent voice within the Internal Revenue Service (IRS), has found serious new problems with the agency’s use of private tax collectors—including an issue that sharply undercuts the fundamental premise of the program.

In a mid-year report to Congress, Taxpayer Advocate Nina Olson—who has previously called for the program’s end—said the IRS is now giving to private tax collectors outstanding cases involving complex issues that IRS employees are currently working to resolve. Further, the report found that IRS costs are underreported and that the IRS’s own collection actions account for a significant portion of the revenues attributed to the private collection program [see page xxvi of the report].

“Placing these types of cases with the [private tax collectors] runs directly counter to the premise on which the program was based—namely, giving [them] only the easy types of cases the IRS itself would not work,” Olson told Congress. She called that “disturbing, because this initiative was premised on the IRS having large numbers of cases that a simple phone call could resolve.”

President Colleen M. Kelley of the National Treasury Employee Union (NTEU), who has been leading the fight to end the privatization of this inherently governmental function, called the Olson report “damning evidence of the folly of continuing this costly and misguided program.”

Further, the NTEU leader said, the Olson analysis “shows that a significant portion of the money claimed to have been collected by the private companies came in to the Treasury as the result of the IRS’s own collection actions. It is clear there is no supportable rationale for continuing this program.” More

House Committee Guts Private Tax Collection

In late June, the House Appropriations Committee approved the fiscal 2009 Financial Services and General Government Appropriations bill with a provision that prohibits appropriated funds from being used to support the Internal Revenue Service’s private tax collection program.
 
According to the National Taxpayer Advocate, through the end of FY 2007, the program had lost $50 million, and taxpayer rights had been violated by private tax collectors. NTEU strongly believes the collection of taxes is an inherently governmental function that should be performed solely by trained and proficient federal employees. More