NTA’s Concerns About Private Debt Collection

May 13, 2014

In a recent letter to Congress, National Taxpayer Advocate (NTA) Nina Olson expresses concerns about private debt collection and offers her perspective on the private debt collection (PDC) program administered by the IRS from 2006-2009. The NTA believes this program undermines effective tax administration and jeopardizes taxpayer rights.

Dear Chairmen and Ranking Members:

I was recently asked by several Senators to provide my views regarding the use of private collection agencies (PCAs) to collect delinquent federal tax debts.1 Specifically, the Senators requested my perspective on the private debt collection (PDC) program administered by the IRS from 2006-2009 and on a revamped PDC provision contained in S. 2260, the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act of 2014, as approved by the Senate Committee on Finance. Because the statute governing the position of the National Taxpayer Advocate generally contemplates my reporting to the tax-writing committees and because I have significant concerns about the PDC proposal, I want to share my perspective with you as well. The text below is substantially identical to the response I sent to the requesting Senators last week.

The Office of the Taxpayer Advocate and I personally were intimately involved in the development of the 2006-2009 PDC program.3 We also handled more than 3,700 cases involving taxpayers against whom PCAs sought to collect. Based on what I saw, I concluded the program undermined effective tax administration, jeopardized taxpayer rights protections, and did not accomplish its intended objective of raising revenue. Indeed, despite projections by the Treasury Department and the Joint Committee on Taxation that the program would raise more than $1 billion in revenue, the program ended up losing money. We have no reason to believe the result would be any different this time...

Download the the full letter.