As in past reports the taxpayer advocate concluded that the IRS’s private debt collection program has failed in most respects.
Agency data show that its own in-house collection function outperforms private collection agencies almost without exception, collecting three times as much as the contractors who are promised up to 25 percent of what they can recover from mostly delinquent accounts.
Contractors have only collected about 4 percent of the outstanding tax balances assigned to them, bringing in less than $56 million in commissionable payments on $1.46 billion of tax debt, while in-house collections brought in 13 percent, the report said.
It said that despite initial expectations that the IRS could learn about state-of-the-art collection practices in private industry through its work with contractors, the agency has now acknowledged that it has not been the case.
The National Treasury Employees Union cited the report in calling for an increase to IRS staff resources including additional personnel. "Since the program began, there has been no question that using private companies to collect taxes is far more costly than having trained, qualified IRS employees perform the same work," said NTEU president Colleen Kelley.
Concluded the report to Congress: "The cost effectiveness data, combined with the IRS mission of helping taxpayers become compliant — as contrasted to the PCA mission of maximizing profits for its shareholders — makes the case that federal tax collection should remain in the hands of federal employees charged to collect federal revenue."
