Thursday, April 20, 2017
In adoration of all things private
The IRS has begun using private debt collection agencies to corral unpaid taxes. This is in lieu of the far more cost effective and law abiding in house collection which over the years has been a problem to far too many big money Republicans.
The Internal Revenue Service is about to start using four private debt-collection companies to chase down overdue payments from hundreds of thousands of people who owe money to the federal government, a job it has handled in house for years.Dear Chuck Schumer, I hope he doesn't really think 300 debt collectors will help any economy with less than 100% unemployment. And if Congress really wanted that money collected, they could have funded the effective IRS debt collection instead of giving up 25% of the take to a bunch of hustlers one of which has already been fired from a government debt collection gig for lying to the customers. Most likely the only result will be further GOP attacks on the IRS.
Unlike I.R.S. agents, who are not usually allowed to call delinquent taxpayers by telephone, the outside debt-collection agencies will have free rein to do so. Consumer watchdogs are fearful that some of the nation’s most vulnerable taxpayers will be harassed and that criminals will take advantage of the system by phoning people and impersonating I.R.S. collectors.
Additionally, one of the four companies that the I.R.S. has hired, Pioneer Credit Recovery, a subsidiary of Navient, was effectively fired two years ago by the Education Department from its contract to collect delinquent debt for misleading borrowers about their loans at what the department called “unacceptably high rates.”
Proponents of the plan, who include Democrats and Republicans, point out that the debtors are shirking their tax obligations and that collecting from them will add to the Treasury’s coffers. The congressional Joint Committee on Taxation estimated that the new debt-collection program had the potential to gain a net $2.4 billion over the next 10 years.
“Collecting tax debt that’s due and not in dispute is a matter of fairness to the many taxpayers who pay what they owe,” said Senator Charles E. Grassley, Republican of Iowa. “It’s been clear for a long time that the I.R.S. isn’t collecting the debt that these contractors will focus on.”
Twice before, in 1996 and 2006, the I.R.S. has tried to farm out some of its collection duties. Both times, the programs were shut down and deemed failures. The most recent attempt cost millions more than it took in. It also generated thousands of complaints, including one oft-repeated horror story about an older couple who received more than 150 phone calls in less than a month.
Even so, Congress passed a law in 2015 ordering the I.R.S. to once again outsource some of its delinquent debt. The provision was buried in a $305 billion highway funding bill. The agency hired four companies — CBE Group, ConServe, Performant and Pioneer Credit Recovery — and started giving them cases this month.
The companies will work on commission, earning up to 25 percent of the delinquent debt they collect.
The I.R.S. is owed some $138 billion in severely overdue payments on 14 million accounts, according to agency data, and that huge sum drives lawmakers crazy. Enlisting the private sector’s expertise to solve the problem is an idea that comes up again and again.
High-profile lawmakers on both sides of the aisle backed the latest debt-collection plan. In addition to Mr. Grassley, Senator Chuck Schumer of New York, the Democratic leader, has been a proponent of using private collectors for years. Three of the four companies that won the latest I.R.S. contracts are based in the two senators’ states.
Mr. Schumer held a news conference in October to announce the 300 new jobs Pioneer planned to add in upstate New York as a result of the I.R.S. contract. The jobs “will help inject new life into the regional economy,” he said.
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