WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) introduced legislation to block the IRS from wasting taxpayer dollars on contracts with private debt collection agencies to collect unpaid taxes.
The IRS has spent three times as much money to run its private debt collection program as it has recovered through the program, wasting taxpayer dollars. Private debt collection agencies have also been shown to target working families with aggressive collection tactics that jeopardize taxpayer rights.
“Taxpayer dollars shouldn’t be spent employing private collection agencies so they can shakedown low-income workers. This is a textbook example of government waste, and we should fix it before more taxpayer dollars are misused,” said Brown.
• According to the IRS’s Taxpayer Advocate Service, in 2017, the private collection agency program cost taxpayers $20 million, while collecting only $6.7 million in return.
• IRS spent nearly three dollars for every dollar it collected in unpaid taxes.
• The IRS paid nearly $1 million in commissions to debt collectors and $9 million for oversight and administrative expenses.
Brown also sent two letters this week voicing concerns over this wasteful program to the IRS Inspector General for Tax Administration (HERE) and to the IRS Commissioner (HERE).
Unlike the IRS, private agencies do not have the same tools available for taxpayers who actually want to satisfy their debt. Allowing contractors to collect taxes on a commission basis incentivizes aggressive collection tactics and minimizes due process. Attempts to turn over tax collection to private debt collection agencies from 2006 to 2009 resulted in contractor fines for violations totaling thousands of dollars. In one instance, these violations led to one of the contracts being terminated.