Once, twice, three times a failure?

In its infinite lack of wisdom, Congress is going to try once again to have private debt collection agencies collect debts owed to the IRS.  In the myriad of news articles about this change in policy, it is often pointed out that this has been tried twice before in the history of the IRS.  The first time was back in 1996 and that lasted about a year before the program was canceled.  Members of Congress and senior Clinton Administration officials were behind the cancelation as the program.  There were numerous complaints of harassment and violations of the rights of the debtors by the collection agencies.  It is also worth mention that the program actually lost money.  The National Taxpayer Advocate, Nina Olson pointed this out to Congress in 2014 when evaluating the two prior attempts to use outside agencies to collect debts owed to the IRS.  In spite of this, in 2015 Congress passed a law once again authorizing the IRS to use outside collection agencies.

This idea actually goes back much further into our nation's history.  The Bureau of Internal Revenue was created by the Revenue Act of 1862 and a decade later Congress gave that agency the authority to contract with three individuals to collect monies owed to the U.S. government.  Two years later, the House Ways and Means Committee issued a report that the contracts "served no useful purpose."  More than likely this latest attempt at privatizing collection of tax debt will receive the same evaluation in a year or two.  Maybe less.  

What makes this idea even worse than it was the last two times is the current problem of scammers pretending to be IRS employees trying to fleece people under the guise of this type of collection.  The primary defense against such scams has been the established notion that the IRS does not call people to collect taxes.  Now people acting on behalf of the IRS will be doing just that.

There are provisions in the program that are intended to make sure that the people who are the targets of this new initiative will know in advance to expect these phone calls.  The IRS will send a letter to these taxpayers informing them that their account has been assigned to one of four authorized collection agencies.  The letter will include a copy of IRS Pamphlet 4518 which discusses the program.  After this, before a phone call comes, the collection agency will also send a letter to the taxpayer.  So the call will not come without warning.

But does that really matter?  Last October a three year investigation culminated in an indictment involving 56 accused scammers in the U.S. who were allegedly working with five call centers in India that involved over $300 million that had been swindled from U.S. taxpayers.

This is a bad idea.