Collectors Cost IRS More Than They Raise

Collectors Cost IRS More Than They Raise
    By Lyndsey Layton and Christopher Lee
    The Washington Post

    Tuesday 15 April 2008

    The Internal Revenue Service expects to lose more than $37 million by using private debt collectors to pursue tax scofflaws through a program that has outraged consumers and led to charges on Capitol Hill that the agency is wasting money for work that IRS agents could do more effectively.

    Since 2006, the agency has used three companies to go after a $1 billion slice of the nation's unpaid taxes. Despite aggressive collection tactics, the companies have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program. The debt collectors have pocketed commissions of up to 24 percent.

"The real choice is whether we use private collection agencies or let these tax debts go uncollected," said Rep. Jim Ramstad (Minn.), the ranking Republican on the Ways and Means oversight subcommittee. "I hope we don't take an enormous step backward in our efforts to close the tax gap by eliminating a program that's working."