The Internal Revenue Service (IRS) is neglecting its responsibilities toward the nation’s poorest citizens. The agency uses private debt-collectors to collect unpaid taxes, an unscrupulous practice that harms the poor and costs society.
Government watchdog group the National Taxpayer Advocate cautioned Wednesday that a “review of tax returns filed as of late September by 4,141 taxpayers who made tax payments after their cases were assigned to private collectors found that 19% of the group had incomes below the federal poverty level… Additionally, 25% of the group had incomes below 250% of the federal poverty level, a common low-income marker. They had a median income of $23,096.”
IRS principles prohibit agents from targeting people who are unable to support themselves. It would be cruel to suck money from someone who can’t pay their rent or is struggling to afford groceries.
Private debt-collectors, however, follow no such principle. 19% of the people they harassed last year were too poor to be able to afford payments.
“While Congress directed the IRS to use private debt-collection firms to seek nearly $400 billion owed, the tax agency also was expected to follow an existing rule designed to ensure that taxpayers… have an adequate means to provide for basic expenses,” National Taxpayer Advocate Nina Olson said in the annual report to Congress.
“No one is making the IRS make these bad decisions… The harm to these taxpayers is something IRS leadership consciously decided to do despite my personal efforts, and those of my organization, to stop it.”
The worst part of the debacle is that it’s actually costing the country money. The agency spent far more on private contractors than it was worth. $20 million was spent last year, yet the program only brought in a little over six million.
“The program as implemented has not generated net revenues and results in the IRS improperly paying commissions to [private collection agencies] for work the did not perform,” reads a report by the National Taxpayer Advocate.
“In the meantime, the most vulnerable taxpayers are making payments and entering into installment agreements they cannot afford, according to the IRS’s own measures.”
President Trump is a marvel. He’s an energetic, strong leader who isn’t handicapped by inane political considerations. If a regular, Washington-grown politician was in office in right now it would be foolish to expect changes at the IRS. President Trump, however, may be able to get something done.
“Thus, it does not appear that the (private-collection agencies) are particularly effective in collecting the debts assigned to them,” reads Olson’s report. “In any event, the cost of the (private debt collection) program thus far exceeds the revenue it generates.”
Tax collection is too critical to be outsourced. The government’s failed attempt to save a few bucks not only cost millions, but it caused irreparable harm to already struggling families. Are they going to trust their government now?
“Being a tax law professor, I may be biased, but I think tax collection is different,” Professor Adam Chodorow wrote for Slate.
“Administering the tax system lies at the heart of the government’s duties… How they are collected has the potential to shape our view of the government and our obligations as citizens. Keeping tax collection in-house offers a number of advantages. The IRS has a detailed manual that clearly lays out what agents can and cannot do. The IRS can easily monitor its employees and discipline those who violate the rules. It can also modify the rules as issues arise. When considering how best to proceed against delinquent taxpayers, agents are instructed to take a variety of considerations into account.”