Winehole23
12-05-2015, 01:34 PM
About 20 years ago, the IRS tried their hand at using private debt collectors. That lasted a year and was canned amid complaints about unfair practices and harassment. Congress made another go at private tax debt collectors during the George W. Bush administration as part of the American Jobs Creation Act. It didn’t end happily. That program “resulted in a number of complaints, including one case in which a private debt collector made 150 calls to the elderly parents of a taxpayer” even after the collection agency discovered the taxpayer was no longer at the address. That’s right, 150 calls to the elderly parents of a taxpayer when they knew the taxpayer wasn’t there. On your dime. Three of the companies that won bids to chase your tax dollars were eventually dropped due to complaints about collections practices and thousands of dollars in penalties were paid out for violations of taxpayer rights. But that’s all good if they are successful, right? The whole “end justifies the means” bit?
Only those private debt collectors weren’t successful. The 1996-1997 program resulted in a $17 million net loss to the government. That second go in the mid-2000s? Another loss of $4.5 million. Those aren’t costs. They’re losses. In terms of costs, the government paid out $16 million in commissions to private collectors in the mid-2000s. An additional $86 million was paid out simply to administer the program – in other words, the cost of producing the result. That result was a net loss.
A 2013 study by the National Taxpayer Advocate (NTA) found that “the IRS was significantly more effective than the PCAs [private collection agencies] in collecting tax liabilities in all but the first six months after case receipt, collecting about twice as much as a percent of the dollars available for collection.” Those first six months? The NTA attributes that statistic to the fact that private collectors worked the easy cases first – the ones where IRS employees had already done all of the legwork. After that time, the NTA found, the amount collected by those debt collectors “falls precipitously.” Cases that were more than one and a half years old, for example, resulted in a ratio of about 1:5 in favor of IRS for collections.
You can read the study here (http://www.taxpayeradvocate.irs.gov/2013-Annual-Report/downloads/The-IRS-Private-Debt-Collection-Program-A-Comparison-of-Private-Sector-and-IRS.pdf) (downloads as a pdf).
http://www.forbes.com/sites/kellyphillipserb/2015/11/03/despite-complaints-past-failures-opportunities-for-fraud-congress-pushes-private-tax-collection/2/
Only those private debt collectors weren’t successful. The 1996-1997 program resulted in a $17 million net loss to the government. That second go in the mid-2000s? Another loss of $4.5 million. Those aren’t costs. They’re losses. In terms of costs, the government paid out $16 million in commissions to private collectors in the mid-2000s. An additional $86 million was paid out simply to administer the program – in other words, the cost of producing the result. That result was a net loss.
A 2013 study by the National Taxpayer Advocate (NTA) found that “the IRS was significantly more effective than the PCAs [private collection agencies] in collecting tax liabilities in all but the first six months after case receipt, collecting about twice as much as a percent of the dollars available for collection.” Those first six months? The NTA attributes that statistic to the fact that private collectors worked the easy cases first – the ones where IRS employees had already done all of the legwork. After that time, the NTA found, the amount collected by those debt collectors “falls precipitously.” Cases that were more than one and a half years old, for example, resulted in a ratio of about 1:5 in favor of IRS for collections.
You can read the study here (http://www.taxpayeradvocate.irs.gov/2013-Annual-Report/downloads/The-IRS-Private-Debt-Collection-Program-A-Comparison-of-Private-Sector-and-IRS.pdf) (downloads as a pdf).
http://www.forbes.com/sites/kellyphillipserb/2015/11/03/despite-complaints-past-failures-opportunities-for-fraud-congress-pushes-private-tax-collection/2/