The House passed a highway funding bill Thursday that includes a provision reviving the use of private debt collectors by the Internal Revenue Service.
The provision has provoked controversy from the National Treasury Employees Union, which represents IRS employees, along with some Democrats in Congress.
“The House gave the green light to debt collectors even as the Federal Trade Commission was announcing an expansive program to crack down on abusive debt-collection tactics,” NTEU National president Tony Reardon said in a statement. “That’s just wrong. The debt-collection industry is one of the most complained-about industries.”
Reardon pointed out that previous attempts to outsource tax debt collection to private businesses have failed to bring in the promised revenue. The government instead lost money, and taxpayers complained of strong-arm tactics by collection agencies.
Low-income taxpayers who lacked the money to settle their tax debts were frequently the victims. National Taxpayer Advocate Nina Olson, a longtime opponent of private tax debt collection, has estimated nearly 80 percent of the cases handled by private collection agencies involve low-income taxpayers.
The proposal also comes at a time when scammers claiming to work for the IRS have called to harass taxpayers around the country about supposed tax debts, frequently swindling elderly taxpayers out of thousands of dollars. According to some estimates, 4,550 victims paid a total of over $23 million to scammers posing as IRS employees.
Reardon is worried the private debt collection program will only serve to further confuse taxpayers. The IRS has repeatedly warned that it only contacts taxpayers by mail, not phone, but debt collection agencies typically use the phone.
Earlier this week, a group of House Democrats, including Ways and Means Oversight Subcommittee ranking member John Lewis, D-Ga., Ways and Means Committee ranking member Sander Levin, D-Mich., and Budget Committee ranking member Chris Van Hollen, D-Md., filed an amendment to remove the provision from the highway bill, but the House Rules Committee failed to consider it.
The Senate passed its own version of the highway funding bill earlier this year, and the union is hoping the private debt collection provision will be removed when House and Senate negotiators meet to reconcile the two bills.
