Report raises questions about tax collection by private firms

WASHINGTON — The Internal Revenue Service must improve oversight of a new program using private agencies to collect taxes before expanding the effort, congressional investigators say.

Critics of the program said Tuesday that the Government Accountability Office report supported arguments that the tax agency was moving too quickly to incorporate an unworkable program.

“I’ve been concerned all along about the use of private contractors to collect federal taxes,” said Sen. Max Baucus of Montana, top Democrat on the Senate Finance Committee. Baucus requested the GAO study with committee chairman Charles Grassley, R-Iowa.

The IRS, responding to congressional legislation, in September initiated the private debt collection program, contracting with three companies. The IRS plans to expand the program to up to 12 private collection agencies, with a goal of collecting some $1.4 billion in back taxes over the next decade.

The GAO report commended the IRS for addressing some important factors for the success of the program, such as proper training for collection agency employees, ensuring that taxpayers are treated appropriately and ensuring the security of taxpayer information.

But it said the agency has yet to complete critical work on setting results-oriented goals and measures and determining private debt collection program costs.

The IRS lacks criteria to assess “whether the program performance warrants expanding the number of private collection agencies and turning over more cases to them,” it said.