House Acts To End Privatized IRS Collections

By ARI PAUL

The U.S. House of Representatives passed a bill Oct. 10 repealing an Internal Revenue Service program of hiring private-sector tax collectors, a step towards victory for the IRS workers' union.

COLLEEN M. KELLEY: 'Outrage' is spreading.

The National Treasury Employees Union lobbied heavily for the Tax Collection Responsibility Act of 2007, which the House Ways and Means Committee approved in July. The union noted the bill received essential support from the committee's Chairman, U.S. Rep. Charles B. Rangel.

'Costs More, Yields Less'

"Not only does it cost more for the IRS to hire private companies to collect taxes, but contractors are not held to the same strict accountability standards as IRS employees," NTEU President Colleen M. Kelley said in a statement. "Increasingly, members of Congress and the public are learning about the outsourcing of the IRS work and becoming outraged."

In addition to arguing that tax collection is inherently government work that cannot be contracted out, Ms. Kelley has said private debt-collectors keep 25 percent of what they collect, and were therefore encouraged to be overly aggressive, which was harmful to taxpayers.

The union has also argued that in-house employees do debt-collection more efficiently, saying they get a 13 to 1 return on investment while private collectors have a 4 to 1 return.

Along with the union, six public-interest organizations signed a letter of support for the bill sent to each member of the House last week. They were the Consumer Federation of America, the National Association for the Advancement of Colored People, the National Active and Retired Federal Employees Association, the National Consumer Law Center, the National Consumers League and the National Council of La Raza.

The bill will now go before the U.S. Senate.

"Opposition to this misguided program in the Senate continues to grow," Ms. Kelley said in an e-mail. "Remember, in the Senate, the full Appropriations Committee already passed its FY '08 Financial Services and General Government Appropriations Act with language capping funding for the private tax collection program at $1 million and requiring IRS to report on providing training and reassignment to collection positions of IRS employees facing layoffs."