IRS May Soon Use Private Debt Collectors
The latest from Congress on the tax front left me shaking my head to say the least. In a recent transportation bill that cleared both the House and Senate, the requirement was inserted that the IRS use private collection agencies to find and collect from delinquent taxpayers.
On the surface this may sound like a good idea – the IRS has been VERY sloppy in its general collection efforts. But this is an idea that’s already been tried…recently…and failed miserably. From 2006 to 2009 the IRS was required to use private collection agencies for this same purpose. The net result – the program cost $4 million more than it earned. And while that’s a small figure in the context of the overall operating budget for the IRS (about $10 Billion), the collection agencies during that time were dealing with the “easy” taxpayers – the ones who had only been delinquent a few months. This new bill would put collection agencies on the payroll to deal with the really difficult ones.
The sponsors claimed this would create jobs and not increase government spending at all. Hard to make sense of that either – I suspect the result will more likely be another short-term program that costs money to fund (the collection agencies won’t cover the loss, the Government will) and has to be abandoned when its results (or lack of them) are exposed.
The House and Senate are still working on the “differences” between the two versions of the bills each body has passed. So there’s a chance this little ripple in a HUGE transportation bill may get sorted out in that process. But don’t hold your breath – it’s Congress we’re talking about. And that’s not exactly the best place to look for common sense and global thinking.