The Internal Revenue Service yesterday became the federal government's official loan collection agency as five federal agencies handed over to it the names of so-called "deadbeats" who owe cash to Uncle Sam.
The names of almost 750,000 borrowers owing a combined total of close to $1.5 billion were given to federal tax collectors, who will withhold the overdue money from defaulters' tax refund checks this year.
But it appears that the mere threat of unleashing the IRS has begun to have the desired effect.
According to the Office of Management and Budget, which keeps track of such things, notice of the new refund-withholding policy was enough to send 41,000 defaulters scrambling to mail in their checks -- which totaled about $14 million.
Those "deadbeats" who decided to pay up include a student-loan defaulter who, after receiving a final notice from the government, sold his wife's car to pay his debt.
Another defaulter, identified by OMB only as a respected legislator in a midwestern state, received word of the IRS crackdown and quickly paid his overdue $2,898 loan by cashier's check delivered by a private overnight carrier.
Another student-loan defaulter, who had dodged federal auditors for months, received notice of the impending IRS action and drove for 6 1/2 hours from St. Louis to Chicago to present his $1,375 check.
Most of the defaulters owe the Education Department for loans granted under the popular Guaranteed Student Loan program. Education officials have made collection of the overdue funds a top priority and have used a variety of other techniques, including the services of a private collection agency.
The Education Department turned over 657,894 names to the IRS in hopes of collecting $1.3 billion in overdue loans.
Other agencies participating are the Small Business Administration, the Agriculture and Housing and Urban Development departments and the Veterans Administration.