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Thursday, August 31, 2006

Willis Criticizes IRS Outsourcing of Tax Collection

WillisLauren E. Willis (Loyola-L.A.) has published an op-ed in the L.A. Times:  The IRS' Biggest Tax Cheat: Itself; Why Is the Agency Outsourcing Overdue Debt Collection, When It Can Do the Job Cheaper?:

Unless Congress steps in to stop it, the IRS is set to begin implementing a wildly inefficient plan to outsource the collection of past-due taxes from those who owe $25,000 or less. IRS employees could collect these taxes for about three cents on the dollar, comparable to other federal programs' collection costs. But Congress has not allowed the IRS, which is eliminating some of its most efficient enforcement staff, to hire the personnel it would need to do the job. Instead, the agency has signed contracts with private debt collectors allowing them to keep about 23% of every taxpayer dollar they retrieve. Employing these firms is almost eight times more expensive than relying on the IRS, but, according to IRS Commissioner Mark Everson, it fits in with the Bush administration's efforts to reduce the size of government.

(Hat Tip:  Katie Pratt.)

http://taxprof.typepad.com/taxprof_blog/2006/08/willis_criticiz.html

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Comments

I can't begin to tell you about the threats, lies, and abuse by collection agencies to obtain past due Georgia taxes. Now, I have some clients scared to death of what will come from the IRS on this. It's not just a matter of money, but it's a matter of controlling the process. It looks as if the IRS will lose out on both--as will the taxpayers.

Posted by: Woody | Sep 1, 2006 9:44:18 AM