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December 16, 2008: Ways and Means Leaders Urge IRS to End Private Debt Collection Service
Taxpayers deserve to work with trained IRS professionals who are more efficient at collecting tax debt
WASHINGTON, D.C. -- Ways and Means Committee Chairman Charles B. Rangel (D-NY) and Oversight Subcommittee Chairman John Lewis (D-GA) joined fellow Committee members in a letter today urging President-elect Barack Obama to end the Internal Revenue Service’s (IRS) use of private contractors to collect Federal taxes.  The IRS is currently deciding whether to renew the existing contracts for another year.  The Committee has taken the lead in recent years on efforts to end the private debt collection program, arguing that tax collection is an inherent Government function and that professional IRS agents are more efficient at collecting outstanding tax debt.  In 2007, the Committee conducted an investigation into the use of private debt collectors and found that their services often subjected taxpayers to undue harassment and confusion not associated with the use of trained IRS agents.

Text of the letter sent to President-elect Obama is and pasted below and a signed copy is attached:

December 16, 2008

President-Elect Barack Obama
The Office of the 2008 Presidential Transition
Washington, D.C.  20270

Dear President-Elect Obama:

    Congratulations on your recent victory.  We are writing concerning the Internal Revenue Service’s (“IRS”) use of private collection agencies to collect unpaid Federal tax liabilities.  Presently, the IRS has contracts with two companies for the collection of unpaid Federal income taxes.  We understand that the IRS is in the process of determining whether to exercise its option to extend these contracts for a one-year period, which would run from March 8, 2009, to March 7, 2010.

    In the 110th Congress, the House passed three bills that would repeal the authority of the IRS to use private collection agencies.  The collection of Federal taxes is an inherent government function. Former IRS officials have testified that the IRS can collect Federal taxes cheaper and more efficiently than the private collection agencies.

    We respectfully request that your Administration not proceed with renewing the existing contracts or expanding the program.  In light of the current economic situation, it is important that the Administration protect taxpayers by ensuring that they deal with the IRS directly to work through any difficulties.

    Thank you for your attention to this matter.  We look forward to working with you and your Administration during the upcoming Congress.

    Respectfully yours,

_________________________        ___________________________
Charles B. Rangel                    John Lewis, Chairman
Chairman                               Subcommittee on Oversight

________________________            ___________________________
Pete Stark                               Sander M. Levin

________________________            ___________________________
Jim McDermott                         Richard E. Neal

________________________            ___________________________
Earl Pomeroy                           Earl Blumenauer

________________________            ___________________________
Shelley Berkley                        Joseph Crowley       

________________________            ___________________________
Chris Van Hollen                      Kendrick Meek

________________________            ___________________________
Allyson Y. Schwartz                   Bill Pascrell

cc:    Peter R. Orszag
    Director-designee, Office of Management and Budget

    Timothy F. Geithner
    Secretary-designee, Department of Treasury

    Douglas R. Shulman
    Commissioner, Internal Revenue Service

Brenda Jones
(202) 226 - 4673


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