IRS Warns of Private Tax Collection Scams

As reported today by BNA, the IRS issued two announcements regarding its private debt collection program, due for launch on September 7: -- one outlining taxpayer protections under the program -- the other identifying ways for taxpayers to avoid scams perpetrated by private collection agencies (PCAs) or those impersonating the IRS. We recently noted the whopping 23.5 percent program overhead that would be eaten up by the commissions to be earned by the private collection companies (as high as 24 percent of tax collections) and the attendant risk of fraud and abuse of taxpayer information. We've also noted that current IRS Commissioner Mark Everson has publicly admitted that the program’s overhead makes it far less cost-efficient than using trained and trusty career IRS agents to do the same work. Furthermore, an internal IRS unit, the Taxpayer Advocacy Panel (TAP), has called upon the agency to drop the plan, citing growing concerns about identity theft and the ethical conduct of government contractors. Outside the IRS, there is opposition from the National Treasury Employees Union (NTEU) that represents IRS employees, as well as from Congress. This week, NTEU issued a press release expressing outrage at the IRS’ rush to implement this gamble in the face of the clear intent of Congress: The agency is moving ahead despite language approved by the House of Representatives in the fiscal 2007 Transportation-Treasury Appropriations bill preventing the use of any money to implement the program. Immediately following its passage, Rep. Steve Rothman (D-N.J.), author of the anti-debt collector amendment, called on the IRS Commissioner to delay the program. That was followed by 27 House members signing a bipartisan letter generated by Reps. Rob Simmons (R-Conn.) and Chris Van Hollen (D-Md.) calling on the IRS to halt the program. The arrogance of the IRS in pushing forward with this misguided and costly program in the face of congressional efforts to halt it is beyond belief,” said President Colleen M. Kelley of the National Treasury Employees Union (NTEU). ”As more details are uncovered, it is increasingly apparent that this will be disastrous for taxpayers. With all the opposition to the program, internal and external, and risks of rip-offs of both taxpayers and the IRS, one wonders: is this program the result of government by the scammers, for the scammers?
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