IRS Decision to End Private Tax Collection A 'Victory' for Taxpayers

In a victory for taxpayers and the country, the Internal Revenue Service (IRS) decided to shut down the private tax collection program.

Kelley applauded both the agency decision not to renew the contracts of the two private companies, and the view expressed by IRS Commissioner Douglas Shulman that agency employees are much more cost-effective and helpful to taxpayers. For more than five years, NTEU spearheaded a campaign to call attention to the flaws of the program, garnering bipartisan Congressional backing and a statement of support by then-presidential candidate Barack Obama.

In ending the contracts, Shulman noted that a study of the cost-effectiveness of the private tax collection program showed “it is reasonable to conclude” that when working similar inventories, “IRS collection is more cost-effective than the contractors.”

This squares with NTEU’s longstanding and strongly-held position. “This result, a long time coming in the face of growing opposition to the program, is not only a good decision by the IRS, it is the right decision,” said President Kelley. “It reaffirms what NTEU has said repeatedly—that given the tools and resources, no one can perform the work of the federal government better than federal employees. This is an important vote of confidence for IRS employees.”

The NTEU leader has consistently called for additional IRS resources and personnel, both for collection and customer service activities.

In announcing its decision, Commissioner Shulman noted the IRS anticipates hiring more than 1,000 additional collection personnel this fiscal year, and that IRS employees have a range of options available to them in attempting to resolve collection cases that, by law, the private companies contracted by the IRS did not have.

These options, which take on increasing importance and relevance in today’s exceptionally difficult economic circumstances, include the offer-in-compromise program, under which a portion of a taxpayer’s obligation can be forgiven; settlement agreements providing for delayed or skipped payments, depending on circumstances; and other steps, the NTEU leader said.

Since the program was first proposed early in the Bush administration, President Kelley led the fight against the IRS use of private tax collectors, citing its cost, its potential for abusive treatment of taxpayers and the serious risk it poses to taxpayers’ personal and sensitive information.

She was joined in her call for an end to the program and repeal of the legislation under which it was authorized by a growing and bipartisan number of House members and senators, as well as by a broad range of consumer and public interest groups. More