Today is the day that the IRS hands over private taxpayer information to private collections companies. In it’s coverage, USAToday neglects to correctly inform readers of the true cost of the program.
IRS officials say the plan involves smaller cases that federal agents
wouldn’t otherwise have time to pursue. The profit potential is large.
The collection companies will keep up to 24% of what they recover. That
amounts to as much as $336 million of the $1.4 billion the IRS projects
the program will recover during the next decade.
From my original post on the program, quoting a NYTimes article:
The private debt collection program is
expected to bring in $1.4 billion over 10 years, with the collection
agencies keeping about $330 million of that, or 22 to 24 cents on the
dollar.By hiring more revenue officers, the I.R.S. could
collect more than $9 billion each year and spend only $296 million — or
about three cents on the dollar — to do so, Charles O. Rossotti, the
computer systems entrepreneur who was commissioner from 1997 to 2002,
told Congress four years ago.
The potential to collect back taxes is large, but it is far larger if the IRS hires more officers, and continues to handle collections themselves.
USAToday also neglects to remind readers that IRS Commissioner, Mark Everson, told Congress the program would cost more. Again from my original post (with a spelling correction in red):
What is even more appalling, is that Mark Everson, our tax Commissioner
even told congress that privatization would be more expensive –
costing the government more in revenue than it would if they allowed
the IRS to hire more agents. Bush and congress totally ignored that.
Put into that mix, one of the partners of one of the three debt
collection agencies awarded the IRS contracts, has gone to jail for
bribary.
The only new piece of information USAToday provides is that this program may be blocked.
The House passed a budget bill that, if approved by the Senate, could
block the IRS from funding the effort. Kelley’s union plans to start
contacting senators when Congress reconvenes this week.
It is important to remember that the IRS isn’t handing over taxpayer information willingly. They were forced by Bush and the GOP-controlled Congress to submit to this program of partial privatization, which is more costly.
[...] IRS privatizes collections, and failed. Note that in order to turn collections over to private companies, it would cost the IRS MORE to collect LESS under a contract with private companies. In other words, for delusional folks like Duncan, keeping collections in-house was cheaper and more efficient. The program was a failure before it started, as private collection companies could never have collected back taxes as cheaply as the government. [...]