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Thanks Ann

Stop it, stop it right now!

That's the order from a group of  U.S. Senators to the IRS regarding the agency's use of private debt collectors to bring in unpaid tax money.

Us_senate_seal_3 Senators Byron Dorgan (D-North Dakota) and Patty Murray (D-Washington) yesterday introduced S. 3887, which, if it becomes law, would halt the privatization effort.

Such a reaction is not a big surprise. This bill was a definite possibility that I mentioned last week when this questionable collection process began. Many lawmakers agree with tax experts and consumer advocates that this is not a good idea, for several reasons:

  • An earlier attempt in the 1990s failed.
  • The bill collection industry has a terrible record and worse reputation when it comes to dealing with "customers."
  • And to top it all off, the whole process is fiscally inefficient, some would even say irresponsible.

The House has already zeroed out funding for future private tax debt collection. That position is likely to prevail when the House-Senate budget negotiations get underway. The Dorgan-Murray bill would go a step further and stop the currently allowed collections.

"This bill tells the IRS to cease and desist from having private companies harass taxpayers," Murray said in a press release announcing the bill's introduction. "While all taxpayers must pay their debts to the Government, every taxpayer should also the right to work directly with the IRS over a disputed tax bill. The IRS has a dismal record of protecting taxpayers' privacy, especially when it involves agency contractors."

Dorgan reiterated that sentiment: "[T]axpayers expect the IRS to protect confidential taxpayer information, and that they will not be subjected to abusive debt collection practices. The failed experience the IRS had the last time it tried to use private debt collectors makes clear [that] taxpayers can have little confidence that either of those expectations will be met."

The bottom line on private debt collection, according to Dorgan:

"It's a bad idea any way you look at it."

Joining Dorgan and Murray as S. 3887 cosponsors are Senators Barbara Mikulski of Maryland, Patrick Leahy of Vermont, Diane Feinstein of California, Daniel Akaka of Hawaii, John Kerry of Massachusetts, Ted Kennedy of Massachusetts, Joseph Lieberman of Connecticut and Frank Lautenberg of New Jersey.

While all the official supporters of this Senate bill are Democrats, you can bet that there also are plenty of Republicans who don't want their taxpaying constituents harassed by bill collectors. Just look at the GOP-controlled House; Representatives voted 406-to-22 to eliminate money for future private tax debt collection programs.

No word yet on what the White House thinks about the tax bill collection program or efforts to squash it, but I suspect that if Dubya made this his second presidential veto, he'd find his popularity rating on Capitol Hill even lower than it is across the rest of the country.


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