By George L. Yaksick, Jr., Washington Staff Writer
Private collection agencies have recovered more than $24 million in the first year of the IRS' controversial outsourcing of tax collection, a spokesperson for the Tax Fairness Coalition said on September 17, 2007. The Service turned over the first taxpayer accounts to private collection agencies on September 7, 2006.
The latest figure reflects a $7 million increase over the past five months. In April, the Tax Fairness Coalition reported that private debt collectors had recovered $17 million. "The success we've seen during the program's first year has been remarkable," the spokesperson said. The Tax Fairness Coalition includes among its members two private collection agencies under contract with the IRS.
"The $24 million is the total amount collected by the program thus far. The first 25 cents on the dollar of amounts collected to go to the IRS to enhance enforcement efforts ($6 million). The private collection agencies then earn an effective rate of 17.5 cents on the dollar, totaling $4.2 million going back to them. The rest of the money collected goes to closing the tax gap to pay for federal government programs," the spokesperson explained.
Cases Being Worked
Two firms--The CBE Group, Inc., of Waterloo, Iowa, and Pioneer Credit Recovery, Inc., of Arcade, N.Y.--are currently working taxpayer accounts. According to the Tax Fairness Coalition, the IRS has assigned 77,000 cases, representing $340 million. Initially, the IRS turned over 25,000 cases.
Cases turned over to private debt collectors are self-reported liabilities and agreed-upon assessments. If the taxpayer disputes the balance due after assignment to a private collection agency, the debt collector must refer the case back to the IRS.
Possible Expansion
The IRS intends to expand the initiative in 2008. As many as 10 private firms could be contacting taxpayers on behalf of the IRS.
However, expansion is not certain. The House Ways and Means Committee voted in July to terminate the initiative. The Senate Appropriations Committee has approved similar legislation. But no full votes have been held in either chamber.
- Related items:
- IRS Outlines Taxpayer Protections in Private Debt Collection Program
- IRS Outsources Some Debt Collection Activity
Added to the news October 16, 2007.
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