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IRS May Soon Use Private Debt Collectors

AUDIE CORNISH, HOST:

One quick question for you - would you rather get a call from the IRS or a debt collector? If Congress gets its way, private debt collectors will be working for the IRS to recover back taxes. That's thanks to a provision tucked into the highway bill. NPR's Brian Naylor reports.

BRIAN NAYLOR, BYLINE: Road building has traditionally been paid for with the gas tax, but inflation and more efficient cars mean the gas tax doesn't bring in the revenue it used to. So lawmakers have turned to the Washington equivalent of looking under the seat cushions for loose change. One pile they are claiming is unpaid income taxes. Congress estimates it could find some $5 billion that way by hiring private collection agencies to go after taxpayers. But critics like Chi Chi Wu of the National Consumer Law Center say, at the most, government would get half that.

CHI CHI WU: Two-point-five billion dollars is a lot of blood to try to get out of a stone. And this isn't just funny math. This is, like, fantasy math.

NAYLOR: That's because she says most of the outstanding debt is owed by low-income taxpayers, plus the collection agencies would get big fees. In fact, the government tried hiring private collection agencies to recover tax debts about 10 years ago but gave up after losing money on the effort. Wu says there were also a lot of complaints like this one she read to me.

WU: (Reading) They keep calling my number and asking for my daughter who doesn't live with me for five to six years. I tried to tell them that we are not in good relationship and I do know where she is, but they just keep calling me and switching the numbers that they call me from.

NAYLOR: The IRS's Taxpayer Advocate is also critical of the proposal, saying it would paint a bull's-eye on the backs of the poor. And Tony Reardon, head of the National Treasury Employees Association, the union that represents IRS workers, says there's another problem.

TONY REARDON: IRS employees have tools at their disposal that they can use to work with taxpayers so that ultimately, the tax debt can get paid. But these private debt collectors do not have those same tools at their disposal.

NAYLOR: Tools like the ability to negotiate payment schedules and waive late payment penalties. But Robert Foehl of ACA International, the group that represents private collection agencies, says his industry has gotten a bad rap.

ROBERT FOEHL: The IRS will thoroughly vet and conduct due diligence on who they're going to be using. And they're going to be using our nation's professional, legitimate debt collectors, not the ones that we hear about the egregious behaviors in the news.

NAYLOR: Opponents say they'll fight to get private debt collection out of the final highway bill, but as it's in both the House and Senate versions, chances are it will remain. Brian Naylor, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR News' Brian Naylor is a correspondent on the Washington Desk. In this role, he covers politics and federal agencies.
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