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Union representing IRS employees irked at budget, opposes use of private contractors to collect tax debt

This news story was published on July 25, 2015.
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tax-return-prepWASHINGTON, D.C. – The Senate Appropriations Committee’s proposed funding level for the Internal Revenue Service (IRS) falls far short of what the agency needs next year to fulfill its mission, the National Treasury Employees Union (NTEU) said last week.

The Appropriations Committee approved a funding bill for fiscal year (FY) 2016 today, under which the IRS would receive $10.47 billion, or $470 million less than this year’s level and $2.45 billion less than the White House’s budget request.

“This bill will result in the continued erosion of the IRS’ ability to accomplish its mission,” NTEU National President Colleen M. Kelley said. “NTEU urges Congress to provide an appropriate level of funding for the IRS, which collects 93 percent of the federal government’s revenue.”

A report released by the independent advocate inside the Internal Revenue Service (IRS) underscored ongoing taxpayer troubles with customer service and identity theft problems attributable to a lack of adequate funding.

In her mid-year report to Congress, National Taxpayer Advocate Nina Olson recapped the 2015 filing season stating that, for taxpayers seeking assistance, “the filing season was by far the worst in memory.”

“It is shocking that severe staffing shortages at the IRS resulted in only 37 percent of taxpayer calls being answered and that the number of ‘courtesy disconnects’ skyrocketed to 8.8 million this filing season,” said Colleen M. Kelley, National President of the National Treasury Employees Union (NTEU). “It is disgraceful that Congress has allowed the level of service to taxpayers to fall so low. These dramatic declines are a direct result of severe cuts to the IRS budget.”

According to the IRS, funding reductions in recent years have prevented millions of taxpayers from getting help at IRS call centers and taxpayer assistance centers and have significantly delayed IRS responses to taxpayer letters.

Olson also highlighted funding concerns, stating, “There is no doubt that the deficiencies in taxpayer service are substantially attributable to a lack of resources.”

Since 2010, IRS funding has been cut by almost $1.2 billion, or 17 percent after adjusting for inflation.

Meanwhile, Senator Chuck Grassley of Iowa today made the following comment on the National Treasury Employees Union’s opposition to the use of private contractors to collect tax debt. The provision is part of the proposed highway bill in the Senate.

“The IRS union is already opposing the use of private contractors to collect taxes that’s part of the proposed highway bill. Meanwhile, the IRS just had one of the worst filing seasons for customer service on record, according to the agency’s own taxpayer advocate. The number of ‘courtesy disconnects skyrocketed’ this last filing season. That means the IRS hung up on callers because it couldn’t handle the calls. The private contractors would take on accounts involving taxes that are due and owed that are just sitting dormant right now. The IRS isn’t even pursuing them. It seems unlikely to do so any time soon when it has trouble answering the phone from people who are trying to pay their taxes. It’s hard to see the logic for the resistance.”

In stark contrast, NTEU National President Colleen M. Kelley railed against the use of private contractors.

“The use of PCAs to collect tax debts has repeatedly been shown to be a waste of taxpayer dollars,” President Kelley wrote. “The Treasury Secretary currently has the authority, but has chosen not to enter into such contracts,” she added.

The first attempt to privatize tax-debt collection was scrapped a year after the program was launched in mid-1990s, the NTEU claims. Taxpayers lost $17 million and some of the companies selected for the pilot projects were found to have violated federal Fair Debt Collections Practices Act. The second attempt began in 2006, when proponents estimated that the program would bring in up to $2.2 billion in unpaid taxes. That attempt was mothballed three years later, after the program netted a loss of almost $4.5 million, President Kelley wrote.

“In addition to being fiscally unsound, allowing PCAs to collect tax debt on a commission basis led to taxpayer abuse. … In one instance, private collectors made 150 calls to the elderly parents of a taxpayer after the collection agency was notified he was no longer at that address,” Kelley wrote.

Taxpayers who are unrepresented and vulnerable are disproportionately likely to be contacted by private tax collectors. According to the National Taxpayer Advocate, who studied the second failed program, the median income of taxpayers whose cases would most likely be assigned to the PCAs is significantly less than the median income of taxpayers whose cases would be assigned to IRS collection personnel.

Additionally, PCAs do not have the ability, as the IRS does, to:

• postpone, extend or suspend collection activities for limited periods of time;

• make available flexible payment schedules that provide for skipped or reduced monthly payments;

• consider waiving late penalties or postponing asset seizures and Offers In Compromise (OIC), or

• enter into an agreement between a struggling taxpayer and the agency that settles a tax debt for less than the full amount owed.

“If a taxpayer’s case gets assigned to a PCA, the taxpayer effectively has fewer options than other, mostly better off taxpayers,” President Kelley said. “To offset the cost of funding the highway bill by letting PCAs—which will pocket up to 25 percent of what they bring in—loose on these taxpayers in not right and should be rejected.”

NTEU is not alone in its opposition to the use of private debt collection companies. The National Taxpayer Advocate, consumer and civil rights organizations and numerous newspapers’ editorial pages have opposed using private tax collectors.

NTEU is the largest independent federal union, representing 150,000 employees in 31 agencies and departments.

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7 Responses to Union representing IRS employees irked at budget, opposes use of private contractors to collect tax debt

  1. Anonymous Reply Report comment

    July 27, 2015 at 9:14 am

    If a governmental agency breaking the law or failing to do what they are suppose to DO NOT FUND them !! Shut them down !!!

  2. Anonymous Reply Report comment

    July 26, 2015 at 3:32 pm

    Defund the IRS. Also, why do we need the VA? Just close the hell holes down. Give veterans the ability to seek treatment anywhere they want !!!

    • LVS Reply Report comment

      July 26, 2015 at 5:03 pm

      @Anonymous-Now that is a thought.

    • Joao de Carmo Reply Report comment

      July 26, 2015 at 5:58 pm

      Better idea would be to de-fund the “Obama-Care”; use the VA to treat those without insurance; and pay for Vets to be treated where they want.

  3. Anonymous Reply Report comment

    July 26, 2015 at 10:50 am

    I agree, cut the mayor ,and Trouts msarly in half, and we could pay a lot less in taxes…

  4. LVS Reply Report comment

    July 26, 2015 at 10:01 am

    They would have plenty of money if they didn’t waste it on unearned bonuses and targeting people and organizations for political reasons. Fire them all and do away with the tax system.

  5. Anonymous Reply Report comment

    July 26, 2015 at 9:35 am

    Get rid of all public servants and hire private employees – these public servants are becoming the high earners in most of America and with their unions and retirement and health benefits they are not feasible or cost efficient any more – that goes from local city hall to DC.