Local Business Groups Fight to Keep IRS Private Collection Jobs

by Mike Bevel, CollectionIndustry.com

Though the outcome is still unclear, many local businesses are hoping and lobbying for the continuation of the IRS’s private debt collection initiative. Business boosters are lobbying to save the IRS’s private-sector tax collection program, arguing it could generate hundreds of local jobs if it survives a hostile Congress.

That “hostile Congress” bit is pretty key, however. Most Democrats have been vocal in their anti-sentiments over the IRS’s proposal to use private debt collection agencies to go after past-due taxes. The main argument is that it is a potential harmful violation of privacy; the undercurrent is the stigma associated with debt collections in the first place. It’s an easy stance for politicians to make to garner support for beleaguered constituents.

New York-based Pioneer Credit Recovery is one of three agencies hired to collect back taxes under the pilot program. The company has between 25 and 45 workers at an office in Perry, about 40 miles east of Buffalo, dedicated to the IRS work.

While the job total is small now, the federal contract could lead to more hiring at Pioneer and other area collection agencies, advocates say. If the pilot program survives, the IRS plans to expand it to collect $1.4 billion in unpaid taxes.

Ending the program "would have a negative impact on Pioneer’s growth prospects, and consequently, on hundreds of Western New Yorkers," a letter sent to Senator Charles E. Schumer by supporters of the program, says.

The letter is signed by the Wyoming County Chamber of Commerce, Wyoming County Industrial Development Agency, Genesee County Chamber of Commerce and Genesee Economic Development Center.

“These are very good-paying jobs with good benefit packages," Jim Pierce, executive director of the Wyoming County Chamber of Commerce, told the Buffalo News. Collectors at Pioneer earn about $35,000 a year including bonuses based on collection success, he said.   

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The House has voted to block funding for the program, but the Senate has not acted. Schumer supported the pilot collection program when it was enacted in 2004, Pierce said. Schumer’s press aide said Wednesday that she wasn’t aware of the letter and had no immediate comment.

The IRS contract extends through the end of 2007.