Irs to use private debt collectors
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IRS gets ready to tap debt collectors
By Thomas A. Fogarty, USA TODAY
WASHINGTON — The IRS is poised to begin using private debt collectors to snag some of the $76 billion in taxes going uncollected because of manpower shortages.
"This problem is so enormous and growing at such a pace, we need to do something dramatically different," says the IRS' Brady Bennett.
As part of President Bush's tax cut bill, Congress has given preliminary approval to using private firms to dun some of the 6.1 million taxpayers with delinquent accounts. Officials say up to $30 billion is going unpaid because the IRS has nobody to ask for it.
The IRS' plan to use private collectors comes six years after Congress reined in its authority after complaints of heavy-handed enforcement. Some critics see the use of private collectors as more of the same.
One unidentified tax lawyer during a question period Friday with IRS officials at an American Bar Association meeting called the plan "outrageous" and characterized as "slimeballs" the majority of debt collectors he's encountered.
Chi Chi Wu, staff attorney at the National Consumer Law Center, has concerns, too: "A significant minority of the industry uses harsh and aggressive tactics." Private agencies collect delinquent student loans for the government, and in many cases fail to inform borrowers of their rights, Wu says.
IRS Commissioner Mark Everson is expected to detail in congressional testimony today a plan permitting private debt collectors to keep up to 25% of what they bring in.
At the ABA meeting, IRS officials outlined a plan in which private collectors would be reined in tightly, and delinquent taxpayers would be informed of their rights. Among the safeguards:
The collection agency would be limited to contact by letter and telephone and would be prohibited from contacting outsiders to track down a taxpayer.
Collectors would be authorized only to collect the money as a lump sum or set up an installment plan — not negotiate a partial settlement or waive penalties.
Collectors would be subject to the same personal legal liability as IRS employees for abusive tactics and be covered by the same federal law that applies to collection of private debts.
The IRS briefly employed private debt collectors as part of a trial that ended in 1997. The experiment was generally viewed as a failure because of the extremely limited powers of the private agents.