The House inched closer toward fiscal sanity yesterday when it voted to ban the IRS’s costly practice of using private collection agencies to collect uncontested tax debts.

The measure is included in the Treasury-Transportation appropriation bill passed by the House yesterday (406 - 22). This method of debt collection is especially wasteful as collection agencies keep 21 to 24 percent of their collected funds. IRS Commissioner Mark Everson testified before Congress earlier this year that IRS employees can do the exact same job but at a cost of less than one percent of the debt collected. The provision, introduced by Rep. Steven Rothman (D.-N.J), would also prevent the IRS from spending $54 million on collection agencies after September.

This administration is hardly ever serious when it talks about fiscal responsibility. In response to the provision, Everson said "using private collection agencies would bring in extra money and help reduce the deficit." A true statement, yes, but terribly misleading and one of which no one can claim as a reasonable approach to fiscal management.

Rep. Rothman's Press Release