Within two weeks, the IRS will turn over data on 12,500 delinquent taxpayers to three collection agencies. The agencies will handles debts of $25,000 or less, with larger debts pursued by the IRS. The hand-off represents the first step in a broad plan to outsource the collection of tax debts to private companies. The plan is an initiative of the Bush administration. IRS officials say that the plan is much more expensive than handling debt collection internally, but that Congress refuses to let them hire more revenue officers, who are necessary for collection. The private debt collection program is expected to bring in $1.4 billion in the next ten years. The collection agencies will retain around $330 million, which equals 22 to 24 cents on the dollar. If the IRS simply hired more revenue officers, they would collect more than $9 billion each year and spend only $296 million, which equals 3 cents on the dollar. IRS officials said that these figures, stated to Congress four years ago, remain correct today. However, Congress declined to authorize the hiring of more revenue officers. Critics of the plan aren't necessarily concerned with the higher cost, but also to the potential for abuse. With private companies involved, debtors are at an increased risk to fall prey to scam artists. The IRS has already alerted taxpayers to many potential scams this year. To guard against fruad, Brady Bennett, collections director, says that agencies will only contact taxpayers by telephone or mail and instruct them to send all payments directly to the United States Treasury, not the private collection agency. The three companies are Linebarger Goggan Blair & Sampson of Austin, Texas; Pioneer Credit Recovery of Arcade, NY; and CBE Group of Waterloo, Iowa. |
