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Private tax debt collection axed by House

Unfortunately for opponents of outsourced tax collection, the House action isn't a fatal blow.

In fact, the passage yesterday of H.R. 3056, the Tax Collection Responsibility Bill of 2007, serves only as an annoyance, not a serious threat, to the efforts of private bill collectors hired by the IRS.

"No" to private collectors: Supporters of the bill, mostly Democrats, say that private collection agencies (PCAs) are not nearly as efficient as IRS employees. House Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., said data shows IRS employees collect unpaid taxes at a much faster pace than PCAs, whom he likened to "bounty hunters" because of the commissions they earn.

Charles_rangel_official_photo_2 "No one ever likes the tax collector but you do feel a little more secure when you know a public servant is doing his or her job and not some fly-by-night company whose profits are based on how much they collect in taxes," Rangel said in a release applauding the House vote. "Today we are improving government accountability and protecting the privacy of taxpayers by stopping the outsourcing of a core government function."

"Yes" to private collectors: Opponents of H.R. 3056, mostly Republicans, disagree with Rangel's assessment and dispute his dollar figures. They say PCAs have been fiscally successful without violating federal consumer protections. (That last part is debatable; see this earlier blog item on the topic.)

Plus, say PCA-supporters, the IRS doesn't have enough personnel to collect money from the hard-to-reach taxpayers that PCAs track down.

When the debate finally wrapped up and the votes were tallied, opponents of private tax debt collectors won. This day, at least. In the House of Representatives. For all the good that does.

When the legislative process runs its full course, PCAs are likely to still be on the job.

Senate support: Senate Finance Committee ranking member Charles E. Grassley, R-Iowa, said the House bill was "dead on arrival in the Senate." Grassley has been a avid supporter of the private tax collection plan, as noted in this blog entry, and he plans to keep up the fight for PCAs.

Charles_grassley_official_photo_2 "Opponents raise the fear of rogue private operators treading all over taxpayers' rights," said Grassley in a prepared statement issued after the House vote. "But the program has multiple layers of scrutiny to make sure taxpayers' rights are fully protected."

As expected, the While House agrees with Grassley (or vice versa), and if a bill to eliminate the private collection program does somehow make it to Dubya's desk, it will be vetoed. The statement making the Administration's PCA point can be found here.

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