TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, January 24, 2018

The IRS Spent $20 Million On Private Debt Collection To Bring In $7 Million

Sam Brunson (Loyola-Chicago), Private IRS Debt Collection: A Surly Taxsplainer:

You may have heard that the IRS spent $20 million last year on private debt collection, and managed to raise … almost $7 million. So what’s up with that? A number of things.

Tax Vox, The IRS Private Debt Collection Program Once Again Looks Like A Failure:

What’s the old line about “fool me once?” When it comes to privatizing debt collections for the IRS, Congress has now tried to fool American taxpayers for the third time. According to a new report by the agency’s Taxpayer Advocate Service, the outcome is roughly the same as the last two episodes—the agency is spending far more on the program than the firms are collecting and remitting to the Treasury. This time, according to the TAS, the agency spent $20 million in fiscal years 2016-2017 on a program that generated $6.7 million in payments through last October.

Just as troubling, the reports finds the debt collectors were mostly targeting lower-income taxpayers, some of whom are receiving Social Security Disability Insurance (SSDI)--a group that was supposed to be excluded from the program. Of the 4,100 taxpayers who made payments after their debts were assigned to private collectors, 1,100, or 28 percent, had incomes below $20,000. About 5 percent were receiving SSDI or Social Security retirement benefits. They had a median income of $14,365.

The TAS reports that about 1,700 taxpayers were placed in installment payment programs even though their incomes are so low that they are unlikely to make the payments. The debt collection firms earned commissions on these agreements, however.

https://taxprof.typepad.com/taxprof_blog/2018/01/the-irs-spent-20-million-on-private-debt-collection-to-bring-in-7-million.html

IRS News, Tax | Permalink

Comments

Well, at least under the new tax law they could carry those losses over indefinitely...

Posted by: Gator | Jan 25, 2018 5:27:08 AM