Tuesday, September 12, 2006

CONTACT: Barry E. Piatt
or  Brenden Timpe
PHONE: 202-224-2551

(WASHINGTON, D.C.) --- The Internal Revenue Service (IRS) would be barred from proceeding with its plan to use private debt collectors, instead of professional IRS employees, to collect unpaid taxes under legislation U.S. Senators Byron Dorgan (D-ND) and Patty Murray (D-WA) introduced in the Senate.

The legislation, S. 3887, would force the IRS to immediately and permanently suspend its plan to outsource part of its tax debt collection responsibilities to private companies and prohibit the use of any IRS funds for that purpose.

“The IRS needs to collect unpaid taxes,” said Senator Dorgan. “Every taxpayer expects no less. But taxpayers also expect the IRS to protect confidential taxpayer information, and that they will not be subjected to abusive debt collection practices. The failed experience the IRS had the last time it tried to use private debt collectors makes clear taxpayers can have little confidence that either of those expectations will be met. This plan will even cost the IRS more money, to collect less debt, than if it used its own professional employees. It’s a bad idea any way you look at it,” Dorgan said.

"This bill tells the IRS to cease and desist from having private companies harass taxpayers. While all taxpayers must pay their debts to the Government, every taxpayer should also the right to work directly with the IRS over a disputed tax bill. The IRS has a dismal record of protecting taxpayers’ privacy, especially when it involves agency contractors." said Senator Murray, who is the top Democrat on the subcommittee that oversees the IRS's budget. "I've written to the IRS Commissioner about my serious concerns over this flawed plan to outsource tax collection. The House has already passed a bill by more than 400 votes that includes a provision prohibiting this effort from going forward. This bill is another way to show the IRS that it should let Congress finish its review before taking steps that could jeopardize the privacy and dignity of American taxpayers."

Under the plan, the IRS will pay 21 to 24 cents for every dollar private debt collectors would collect. Past IRS reports, however, suggest the IRS would pay only 3 cents for every dollar collected by IRS employees. The IRS employees would also collect nearly 10 times more in unpaid taxes.

The U.S. House has already voted, 406-22, to prohibit the IRS from implementing the plan, and Dorgan and Murray said they expect strong support for their legislation in the Senate.

In addition to Dorgan and Murray, co-sponsors include Senators Barbara Mikulski (D-MD), Patrick Leahy (D-VT), Dianne Feinstein (D-CA), Daniel Akaka (D-HI), John Kerry (D-MA), Edward Kennedy (D-MA), Joseph Lieberman (D-CT) and Frank Lautenberg (D-NJ).

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