Private tax collectors 1, taxpayers 0

July 3, 2007

Before Capitol Hill cleared out for the July 4th holiday, the House approved an $11 billion IRS budget.

Irs_logo_208
That’s a
4.7 percent increase over last fiscal year’s IRS budget. The money for FY 2008, which begins Oct. 1, includes $3.6 billion for taxpayer service; $7.2 billion for enforcement efforts; $282 million for business systems modernization; and $116 million for tax compliance research.

But the bill is noteworthy for what isn’t in it.

The House removed a provision that would have eliminated funding for the private collection of tax debts.

The outsourcing of tax collection has been a contentious issue for the last several years. Even before the current program began last fall, some lawmakers began working to kill it. The House did in fact approve outright repeal of the program last year, but since the Senate failed to act, the program continued. (You can read the pro-con saga in this collection of blog postings.)

This year, opponents took another approach. They inserted language in the 2008 budget limiting the IRS to no more than $1 million to "renew, extend, administer, implement, enforce, provide
oversight of" private tax-debt collection. That would have effectively killed
the program.

But when it came to a vote on June 28, defenders of the debt collection program used
a procedural move to strip the funding limitation from the bill. Dismantling the collection effort now, they argued, could cost the IRS
$69 million in 2008.

Dollar_signs_3_3
Privately raking in the tax dough:
Enough Representatives also were apparently swayed by the dollars that the IRS says the program will bring in
an estimated $22 million in 2007 and $63 million in 2008. So far, according to the IRS, private collectors have recovered almost $20 million, and the agency’s goal over the next 10 years is more than $2 billion.

Opponents of private tax collection vowed to keep fighting. "There is clearly a consensus in the Congress to end the ongoing abuses in the IRS’ private tax collection program, and that consensus
won’t be thwarted by procedural gimmicks," said Rep. Chris Van Hollen, D-Md. "We are determined to end this kind of bounty-hunting activity once for all."

The appropriations measure also must clear the Senate, which has a private tax-debt collection ally in Senate Finance Committee ranking member Charles Grassley, R-Iowa, who earlier this year wrote his colleagues urging their support of the program.

Ultimately, any funding measure must go to the president for signature. And while the White House supports private tax collection, a spokesman for the president said Dubya might veto the entire bill if it
exceeded his recommended budget amounts, which the House bill does by
$52 million.

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
The latest Dirty Dozen tax scam list is familiar because too many are still falling for the schemes

March 5, 2026

Tax filing season is also peak time for tax scams. Be on the lookout for…

Read More
Hello Tax Season 2026

Happy New Tax Year! Are you ready to file your 2025 tax return? I know, too early to ask. But Tax Day 2026 will be here before we realize it. The Internal Revenue Service deadline to file and pay any tax we owe is the regular April 15 date this year. It’s also Tax Day for most of the states that collect income taxes from their residents, which is most of the states! If that seems too far away right now, don’t worry. As is the case every tax season, the ol’ blog’s tips and other tax reminders should help all of us meet our state and federal responsibilities. Procrastinators also will want to keep an eye on the countdown clock just below. It tracks how much time we have until April’s Tax Day, just in case we put off our annual tax task until the absolutely final hours and decide we need to instead get an extension request into the IRS by that date. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
  • Thats about right…Get tough on American taxpayers and let the illegals pay ZERO TAX and forgein investors who open Hotel and convience stores remain exempt from paying income tax or Hotel Tax. Someone HELP, lets get this fixed.
    DK

  • Stillarfish

    I fail to comprehend the purpose of the IRS if private tax collectors are doing the same job!!! Beside collecting taxes what else do they accomplish??? There is a limited to outsourcing government functions and if you take this route then outsource the entire IRS and dismantle the government agency!!!

Leave your comment