Agency Spotlight–IRS to Outsource Debt Collection Again

Feb 7, 2017

Overdue paperwork

The IRS has announced plans to begin the private collection of certain overdue federal tax debts as early as Spring 2017. This will be the third time that they have attempted to outsource debt collection; once in 1996-1997 and again in 207-2009. Both trials failed.

Opposition to Private Contractors

The National Treasury Employees Union National President Tony Reardon told Congress that instead of hiring private contractors, the IRS should retain the more than 7,000 employees who process paper returns, slated to lose their jobs as more people file electronically.

In September 2016, the IRS announced that nearly 1,800 employees in Covington, KY, 3,000 in Fresno, CA, and 2,400 in Austin, TX would have their jobs phased out between 2019-2024.

In 2004, Congress passed the American Jobs Creation Act, granting the IRS authority to contract out the collection of past due taxes to private collection agencies (PCA’s). That effort lasted from 2007 to 2009. A study by the IRS after the 2009 effort found that the IRS collected 62 percent more than the PCA’s.

Renewed Efforts and Contractor Selection

Despite the poor performance by private debt collection agencies, in 2015 Congress instructed the IRS to try again. Under the law, the IRS must designate contractors to collect, on the governments’ behalf, outstanding inactive debts. One condition of receiving this contract is that these companies respect taxpayer rights. They must do this by abiding by the consumer protection provisions of the Fair Debt Collection Practices Act.

The IRS will give taxpayers and their representatives notice that their accounts are being transferred to a PCA. Those agencies will then send a separate letter confirming the transfer.

The four agencies awarded contracts this time are Conserve, Pioneer, Performant, and CBE Group.

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