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Outsourcing Tax Collection

Friday, December 17, 2004; Page A32

In response to the Dec. 9 editorial "Why Can't the IRS Do It?" I would like to explain the rationale for using private firms to collect unpaid taxes owed to the IRS. This policy is a matter of fairness: You pay your share of taxes; so should everyone else who owes them. Debt-collection firms successfully collect tax debt for more than 40 states and student loan debt for the U.S. Education Department.

While the editorial mentions consumer complaints about debt-collection firms, these complaints are a small fraction of the millions of consumer contacts. And nearly all the complaints are about a few disreputable firms that routinely violate the Fair Debt Collection Practices Act, the federal law that protects consumers from midnight calls and other harassment. The new law makes firms that violate this law ineligible to collect federal tax debt. It also allows consumers to sue firms that violate the law on top of the civil and criminal penalties that apply to IRS employees who violate taxpayer rights.

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While some states pay a percentage of the amount collected to these firms, the law will further protect taxpayers by compensating firms based on balanced criteria that include customer satisfaction and compliance with taxpayer-protection laws.

Even if the IRS were given more resources, its priority should not be debt collection. Private firms have better expertise and technology for locating tax debtors. The firms will be assigned only straightforward cases in which taxpayers have admitted they owe taxes.

Highly skilled IRS revenue officers with more complex cases should not spend their valuable time locating and calling taxpayers a private firm can reach more efficiently.


U.S. Representative (R-Minn.)


The writer is a member of the House Ways and Means Committee.

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