The Internal Revenue Service should be allowed to send private debt collectors after tax cheaters because they would do a better job of recovering money than the Treasury Department does now, according to Sen. Chuck Grassley.
The government used private collection companies for more than two years, beginning in 2006, to work cases considered “low yield” by the IRS. Nearly $100 million was recovered.
But the program, created under the 2004 American Jobs Creation Act, was killed by the IRS in 2009 when the agency decided not to renew contracts with the debt-collection agencies.
“The IRS claimed that IRS employees could collect the tax debts cheaper and better than private employees,” according to Forbes magazine.
But Grassley, a former chairman of the Senate Finance Committee, disagrees. In a letter to IRS commissioner nominee
John Koskinen, Grassley states that the decision to eliminate the private debt-collection program was based solely on a study the agency claimed proved that it could do the job more cost-efficiently.
But the Republican senator charged that the IRS “cooked the books” to get the result it wanted, noting that the Government Accountability Office had found the study was flawed.
Citing a report by the Treasury Inspector General for Tax Administration, Grassley also pointed out that tax-enforcement revenue has decreased for two consecutive years and is currently 13 percent less than it was in fiscal year 2010. Tax delinquent accounts have grown by 46 percent over the past five years and accounts receivable have increased by approximately $100 billion in the last 10 years, according to Grassley.
According to ABC News
, the figure is closer to $280 billion when including people who simply haven't bothered to file a tax return.
Grassley used the IRS’ own data to note in his five-page letter to Koskinen that the quality ratings of private-contractor employees were consistently above those of IRS employees. Grassley made it clear that he wants Koskinen to make a decision within the first 60 days of taking office on whether to reauthorize the private debt-collection program.
“I encourage you to show the leadership necessary to set aside the narrow-minded ideology that grips some at Treasury and the IRS and put good tax administration first — and reinstate the PDC Program immediately," Grassley wrote.
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