Treasury union members rally against outsourcing tax collection

Treasury union members gathered outside the Internal Revenue Service building on Wednesday to protest a controversial measure to privatize some tax debt collection.

Members of the National Treasury Employees Union, visiting Washington from around the country for an organizing meeting, paraded in front of the IRS on Constitution Avenue during the lunch-hour rally, hoisting signs and chanting slogans such as "Hey hey, ho ho, bounty hunters gotta go" and "Don't be fooled by White House lies, it's not wise to privatize."

NTEU has strongly opposed an IRS initiative to outsource some of the agency's debt collections, arguing that putting taxpayer data in the hands of private collectors presents a privacy and security risk, and that private contractors will be paid much more than it would cost federal employees to do the collections work.

The IRS expected to award contracts to about three private collection agencies on Wednesday, but those awards were delayed to later in the month, said John Lipold, an IRS spokesman.

Speaking at the rally, NTEU President Colleen Kelley said collections by IRS employees have been found to cost 53 cents per $100 collected, while the IRS contract with private debt collectors would provide for fees of up to 24 percent of total collections. "This makes no business sense," Kelley said.

Last year, consumers reported more than 58,000 complaints about private debt collectors to the Federal Trade Commission, Kelley said, calling debt collection "the most complained-about industry in America."

"The use of private collection agencies is intended to supplement the work of IRS employees, not replace them," IRS officials said in a statement. "Using private collection agencies to help reduce the IRS collection inventory also will free IRS employees to pursue more complex cases."

But Kelley said the IRS collections workforce has been reduced over the past six years through attrition, largely stemming from budget cuts. She has argued for more resources for both enforcement and customer service at the agency.

In their statement, IRS officials countered that "the IRS must use all reasonable tools" to reduce the $345 billion gap between the taxes owed and those collected.

"Private collection agencies can never replace internal IRS collection resources," the statement said, noting that IRS employees have tools not available to private collection agencies, including the power to levy and file liens on property, "which could not be properly given to a private collection agency."

Rep. Rob Simmons, R.-Conn., introduced a bill last year (H.R. 1621) that would repeal the Treasury Department's authority to enter into private tax collection contracts, but it would not apply to contracts entered before it becomes law.