Senator Goes to Bat for Collection Agencies on IRS Contract

Democrats, newly in control of the House and Senate, have not been the best allies of the IRS’s plan to privatize tax collection through debt collection agencies.  The plan, they feel, is flawed and open to too much potential for abuse.  “Besides,” the thinking seems to suggest, “shouldn’t the IRS be collecting its own taxes?”

In the corner with the Democrats is National Taxpayer Advocate Nina E. Olson and a report she filed with Congress.  Olson’s report singled out a number of the Internal Revenue Service’s collection policies as needing a drastic makeover.  Ultimately, though, Olson’s report wasn’t interested in the makeover.  Her report on the IRS’s plan could be summed up in two words: “Scrap it.”

Enter Sen. Chuck Grassley, R-Iowa, the ranking member of the Senate Finance Committee.  Grassley has expressed concerns with Olson and her office, and the analysis of a program that hasn’t really been given a chance to work.

“The tax debt collection arena, with approximately $120 billion of uncollected taxes due and owing, is an area begging for improvement,” Grassley wrote. “The use of [private collectors] is an active, immediate and proven step towards increasing the number of closed collection cases.”

Further, Grassley shared that he learned that the performance of the collectors has been better than the IRS’s planning assumptions, and that the private agencies have abided by the Fair Debt Collection Practices Act, the Privacy Act, and the Fair Credit Reporting Act, as well as the IRS Restructuring and Reform Act of 1998, which limits overzealous collection tactics by collection agents.

Grassley has asked Olson to respond to a number of his criticisms of her report by February 28.

The full text of Grassley’s letter can be read, as a .pdf, here.