IRS is not pursuing many private debt collection cases PDF Print E-mail
News Releases - Business, Economy & Finance
Written by Grassley Press   
Friday, 11 November 2011 15:04
Wednesday, Nov. 9, 2011

Sen. Chuck Grassley of Iowa expressed concern in 2009 when the IRS, Treasury Department and congressional supporters decided to end a program using outside contractors to try to help collect overdue taxes.  Grassley made the following comment today on a new report showing the IRS has not pursued many of the cases from the private debt collection program.

“The IRS assured us all that the agency could do a better job with these tax cases than outside firms and didn’t need any help.  It turns out that the IRS isn’t doing a better job and in many cases, isn’t doing the job at all.  The IRS and Treasury Department went out of their way to stop a means of collecting tax debt that the IRS otherwise will never collect.  They bowed to union pressure and terminated an alternative collection program before it had a chance to reach its full potential.  It’s a shame the IRS continues to let tax debt slide while honest taxpayers pay what they owe.  The agency should explain why that’s the case.  And the Administration should be focused on collecting existing taxes owed before trying to impose new taxes, as is being suggested in deficit reduction proposals.”

Report details follow:

Treasury Inspector General for Tax Administration

Press Release


November 9, 2011
TIGTA - 2011-80
Contact: David Barnes
(202) 622-3062
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

TIGTA: The IRS Did Not Pursue Collections on All Cases Returned From the Private Debt Collection Program

WASHINGTON – The Internal Revenue Service (IRS) has not taken collection actions on 47 percent of a statistical sample of 62 past-due tax cases that were returned when the Private Debt Collection Program ended in 2009, according to a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

From 2006 to 2009, the Private Debt Collection (PDC) Program collected $98.2 million from delinquent cases that were considered low-yield and therefore not generally worked by IRS employees. The IRS initially contracted with three private debt collection agencies to pursue these collection cases.

When the PDC Program was discontinued in March 2009, the IRS recalled cases with a total assessed balance of $848.5 million from the remaining contractors. TIGTA reviewed the effectiveness of collection actions taken by the IRS on taxpayer accounts returned by the PDC Program.

The IRS did not always pursue collection actions on cases returned to the IRS or analyze the best practices of the private debt collection agencies in the PDC Program for possible improvement of IRS collection practices, TIGTA found.

“The IRS must do its best to work these cases, since taxpayers who do not timely pay all their taxes create an unfair burden on taxpayers who do,” said J. Russell George, Treasury Inspector General for Tax Administration. “This sense of unfairness can erode the public’s respect for the tax system,” added George.

TIGTA reviewed a statistical sample of 62 cases returned in Fiscal Year 2009 and found that collection actions were not taken for 29 (47 percent) of the 62 cases. These cases were not selected for collection action due to collection policies and inventory assignment practices. TIGTA estimates that potentially $30.7 million in collections will remain as outstanding liabilities. In addition, TIGTA estimates that the IRS may not collect an additional $103.2 million per year, or $516 million over the next five years, from similar cases in its inventory that would have otherwise been assigned to the PDC Program.

TIGTA also reviewed a statistical sample of installment agreement cases returned during Fiscal Year 2009 and determined that no collection actions were taken for six (10 percent) of 61 cases reviewed. TIGTA estimates that potentially $58,000 in collections will remain as outstanding liabilities. Finally, the IRS did not capture or use PDC Program data and results to improve its own collection practices.

TIGTA recommended that the IRS:

  • Ensure that Collection policy and procedures are reviewed for inventory assignment practices to determine if cases that otherwise would have been assigned to the PDC Program can be worked, or consider reinstituting the Program; and
  • Evaluate private-collection agency best practices and lessons learned for potential improvement of IRS collection processes.

In their response to the report, IRS officials partially agreed with the recommendations and stated that they have begun taking steps to address TIGTA’s concerns. The IRS implemented a process to improve balance-due case prioritization and reviewed collection agency operations to identify potential best practices. TIGTA is encouraged by the IRS’s commitment to improving case selection and prioritization processes. However, it is still unclear how the IRS would actually work lower priority cases like those eligible for the Program.

Read the report.

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