Private Tax Collectors

One of the other hidden features of the huge omnibus bill that is being re-voted on today (because of the egregious "Congressmen get to look at everyone's tax returns" provision that was slipped in by a staffer) is support for the IRS to contract out tax collections to private debt collectors.

Private collectors will have authority to set up installment payment agreements, and gather financial information about those targeted, presumably to assess their ability to pay or to locate assets that might be attached.

People on both sides of the issue say they believe IRS workers can collect unpaid taxes more cheaply and effectively than contract collectors. But because of chronic staff shortages and other resource constraints, IRS workers often are unable to follow up until years later.

"We do view this as an important step forward in strengthening tax administration," IRS Commissioner Mark W. Everson said last week. "It parallels what is already being done in over 40 states. It will be done with full protection of taxpayer rights, and . . . it's absolutely necessary, particularly in an environment where Congress has cut back on funding for the IRS."

See, since we aren't funding the IRS enough to do a good job of collecting taxes, we need to farm the job out to private firms who are more expensive and less effective.

I'm sure this will enhance the public's customer experience, since debt collection agencies are well-known for being polite, reasonable, and law-abiding, just as you'd expect from people getting a cut of the money they bring in.

It just wouldn't make sense to fight for proper funding for the IRS instead. After all, if they did that, how would the debt collection companies be able to afford their contributions to Republican campaigns?

One company that lobbied for the change is California-based Diversified Collection Services Inc., one of eight companies indicted in September by a Texas grand jury, along with three Republican fundraisers for House Majority Leader Tom DeLay (R-Tex.), on charges of alleged money laundering and illegal corporate campaign contributions.

A DeLay spokesman said last week that neither DeLay nor anyone in his office has had any contact with Diversified Collection representatives for several years.

The company has contributed about $435,000 to Republican Party organizations since 1999, Federal Election Commission records show.

James Tracey, Diversified's chief executive, has contributed thousands of dollars to GOP causes and candidates. This year, he gave $3,000 to the campaign of Rep. Pete Sessions (R-Tex.), a member of the Rules Committee and a key supporter of legislation allowing the IRS to use private collectors.

"Your winnings, Captain Renault?"