DORGAN APPLAUDS ADMINISTRATION DECISION TO END WASTEFUL PRIVATE TAX DEBT COLLECTOR PROGRAM
Contractors cost $80 million to collect $60 million in net revenue
Friday, March 6, 2009
(WASHINGTON, D.C.) --- U.S. Senator Byron Dorgan (D-N.D.) applauded the Obama Administration’s decision late yesterday to put an end to the private tax debt collector program at the IRS. Dorgan has long fought to end the wasteful program, saying it makes no sense to spend $80 million on private collectors that have collected only $60 million in net revenue.
Studies of the IRS’s private debt collector program have shown that professional IRS employees are more effective than private contractors at collecting unpaid tax debts. A study released this week showed that IRS workers collect revenue at a cost of 7 cents for each dollar collected, while private collection firms racked up a cost of 24 cents per dollar collected. Professional IRS workers were also more effective, collecting almost three times as much balance due as private firms.
The program to outsource federal tax debt collection to private firms has lost tens of millions of dollars since its start in the fall of 2006.
“I spoke with IRS Commissioner Shulman this morning about this decision, and I believe it’s the right one,” Dorgan said. “The IRS has two important duties: safeguard taxpayer dollars, and protect confidential taxpayer information. The private debt collector program failed on both counts. I believe the Obama Administration understands that, and I’m glad they have decided to scrap this program and move forward with a more responsible system.”
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