A bill has been introduced in the Senate which would end the private debt collection program at the Internal Revenue Service, if passed.
The legislation was introduced on Wednesday by Sen. Benjamin Cardin [D-Md.], and was co-sponsored by Sen. Sherrod Brown [D-Ohio] and Sen. Elizabeth Warren [D-Mass.].
The bill has been referred to the Senate’s Finance Committee for review.
“The IRS private debt collection program is nothing more than a waste of taxpayer money,” said Sen. Warren, a member of the Senate Banking Committee, in a statement. “Not one penny of Americans’ hard-earned pay should be going towards ineffective private collection agencies. I’m glad to work with Senators Cardin and Brown to finally abolish this harmful program.”
A lot of negative coverage about the program was received last month when the IRS’s taxpayer advocate issued a report revealing that the cost of the program is three times higher than the amounts that have been collected by the private collection agencies under contract with the tax agency. From the report:
In fact, the letter that the IRS sends to individuals notifying them that their debt is about to placed with a private collection agency is generating 40% as much as the efforts of the collection agencies themselves. And the IRS is paying a 25% commission to those accounts, even though nothing is being done by the agency.
A copy of the bill can be accessed here.
