Gov't to outsource tax collection to private agencies

[Joe]

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When Reps. Shelley Moore Capito (R-W.Va.) and Chris Van Hollen (D-Md.) teamed up in September to get the House to pass an amendment blocking the use of private companies to collect back taxes from delinquent taxpayers, it seemed the Bush administration plan might be doomed for at least a year.

But in the final hours of drafting a 3,300-page spending bill last month, House and Senate negotiators eliminated Capito's and Van Hollen's handiwork, clearing the way for the Internal Revenue Service to hire commercial debt collectors. These private agents could keep as much as 25 percent of the amounts they recovered.

While the Bush administration has strongly supported the initiative as a way to increase revenue collections amid growing deficits, critics contend it could lead to harassment of taxpayers and breaches of privacy. Labor groups representing federal workers also oppose the change. But it has the backing of the debt-collection industry, which has contributed heavily to GOP organizations and causes since Bush became president.

One company that lobbied for the change is California-based Diversified Collection Services Inc., one of eight companies indicted in September by a Texas grand jury, along with three Republican fundraisers for House Majority Leader Tom DeLay (R-Tex.), on charges of alleged money laundering and illegal corporate campaign contributions.

A DeLay spokesman said last week that neither DeLay nor anyone in his office has had any contact with Diversified Collection representatives for several years.

The company has contributed about $435,000 to Republican Party organizations since 1999, Federal Election Commission records show.

James Tracey, Diversified's chief executive, has contributed thousands of dollars to GOP causes and candidates. This year, he gave $3,000 to the campaign of Rep. Pete Sessions (R-Tex.), a member of the Rules Committee and a key supporter of legislation allowing the IRS to use private collectors.

Sessions's chief of staff, O.L. Guy Harrison IV, said the congressman had been "interested in this for four to six years as a good government issue." Tracey, he said, had raised "a little bit" of money for Sessions. A company official said last week no one was available to comment.

The action by House-Senate conferees drafting the omnibus spending package is one of dozens that have come to light as the public gives more scrutiny to the huge government-wide spending bill passed Nov. 20.

The removal of the restriction on private tax collectors leaves in force legislation enacted as part of this year's corporate tax bill, allowing the IRS to contract with private companies.

Under the legislation, contractors will not have access to tax return information, other than the amount owed, and will have no role in determining the amount that is owed, officials said. They will be given names, addresses, phone numbers and other identifying information about delinquent payers.

Private collectors will have authority to set up installment payment agreements, and gather financial information about those targeted, presumably to assess their ability to pay or to locate assets that might be attached.

People on both sides of the issue say they believe IRS workers can collect unpaid taxes more cheaply and effectively than contract collectors. But because of chronic staff shortages and other resource constraints, IRS workers often are unable to follow up until years later.

"We do view this as an important step forward in strengthening tax administration," IRS Commissioner Mark W. Everson said last week. "It parallels what is already being done in over 40 states. It will be done with full protection of taxpayer rights, and . . . it's absolutely necessary, particularly in an environment where Congress has cut back on funding for the IRS."

But Capito, whose district includes an IRS installation employing 1,000, said she was concerned contractors whose pay was determined by the amounts collected would be inclined to use aggressive tactics and harassment. "There are a lot of unanswered questions," she said.

"It could result in a loss of objectivity. It could cloud your judgment," said Van Hollen, who noted that IRS rules expressly forbid rewarding service employees based on how much they collect.

The amendment to prohibit the administration from moving ahead with the plan passed on a voice vote in September during House consideration of the spending bill funding the IRS in 2005. During a brief debate that revealed divisions on the question within both parties, some Democrats supported the idea of private collections while several Republicans expressed concerns.

The use of private collectors has been debated for many years. In 1996, the General Accounting Office (now the Government Accountability Office) suggested that "there may be a role for private debt collectors in collecting federal tax debt."

In 1996 and 1997, Congress directed the IRS to test the idea, but the experiment was called off early after it turned out that the program was costing more than it was bringing in.

But that program was significantly different from the one approved this year. The previous program did not allow commission-style payments to the private collectors, who were paid a flat fee. Private agents were used only to locate and contact delinquent taxpayers. Collection was left to IRS employees.

[The Duchess of Zeon]

...Well, fuck.

The only positive I can see out of this is that the French Tax Farm corporation of the 18th century paid for a Ship of the Line as a patriotic gesture, so maybe we'll get a new carrier out of this. On the other hand, expect for your taxes to increase by 25%, all of which will go directly into the hands of the private corporations collecting taxes. This is just insanely stupid. It's literally turning back the method of tax collection by two hundred and twenty-five years.

[neoolong]

Didn't this occur back in the days of kings. I don't recall it working particularly well then.

[The Duchess of Zeon]

Didn't this occur back in the days of kings. I don't recall it working particularly well then.

Yes, it did. The Tax Farms, as they were called, would give the government an amount of money each year, effectively "buying" the rights to tax the people. They would then send goons around to everyone in the kingdom forcing them to pay up (along with a hefty additional fee they were allowed to keep for themselves). This won't be nearly that bad, obviously, but it's still tremendously and ridiculously stupid.

[HemlockGrey]

Well, good to know that George W. Bush is proudly leading the charge into the 17th century in areas other than social tolerance and civil rights...

Thanks Bush-voters, that was really a smart choice.

[Patrick Degan]

I see lots of abuse of ordinary citizens down the line over this.

But remember, Republicans, no complaining. After all, this is what you voted for.

[Zac Naloen]

Was this something mentioned in his campaign??

wtf... All that talking about tax in the debates, i don't recall anything like this.

[Nieztchean Uber-Amoeba]

Today: Private agaencies collect taxes.

Tomorrow: Leeches and boiling oil in hospitals.

[The Duchess of Zeon]

Was this something mentioned in his campaign??

wtf... All that talking about tax in the debates, i don't recall anything like this.

No, and the fact that it was going to be made illegal just in September also made it seem relatively irrelevant regardless.

[Mr Bean]

If I'm not mistaken these will only be used to collect money from those who won't pay

As now you can already pay your taxis with nothing more than a bank card and an internet connection

[Mayabird]

If I'm not mistaken these will only be used to collect money from those who won't pay

As now you can already pay your taxis with nothing more than a bank card and an internet connection

So these companies will be like bounty hunters for tax evaders? If it's just that, I guess I can live with it.

[SirNitram]

I seem to remember Bush did say something related. There was something he tossed out on the Election trail about ditching the IRS completely, wholesale.

Everyone, including the media, leapt to the conclusion he was going to switch to a simple, flat tax rate. People began waxing poetic about the advantages of it, and people mused on Karl Rove's brilliance on deploying this bomb against struggling Kerry. When Bush won the election, everyone forgot about it. Another campaign 'promise'.

Now, it occours to me that if you gradually privatize the entire IRS into debt collectors, you've abolished the IRS completely....

[tharkûn]

As I understand this all the private companies would be doing would be going after deadbeats. As long as they can't do anything except collect, and only in circumstances where the individual is not already trying to resolve the issue with the IRS ... it really is no different than a credit card company seeking payment. Payment by percentage tends to work well to both recruit effective individuals and to motivate the same individuals; I really don't see how private bill collection is going to turn into tax farming.

[SyntaxVorlon]

It looks like Dubya's thinking bigger than Dole at least. Bridge to the 19th century? Hell no, Bridge to the 18th Century!

Wow this is so absurdly stupid it is literally making me wonder if this isn't just some idiot making it up. My mind just isn't ready to comprehend something this stupid.

[Admiral Valdemar]

Haha, America didn't need the Soviets to fuck itself. Just wait for Bush, he'll do what no superpower ever could.

[White Haven]

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