A bill has been introduced in the House of Representatives aimed at overhauling the Internal Revenue Service and while it does not do much to the agency’s private collection agency plan, it does include some provisions that would reduce the number of cases available to be outsourced to third-party agencies.
The bill was introduced by Rep. Lynn Jenkins [R-Kan.] and Rep. John Lewis [D-Ga.], the chairman and ranking member of the House Ways and Means Committee, which oversees the IRS.
The IRS was forced to re-institute a private collection agency program by Congress back in 2015. But like previous attempts, the current program is having more than its share of problems. The IRS’s Taxpayer Advocate recently issued a report slamming the program, saying it was costing more than the private agencies were collecting. The total cost of the program — $20 million — is three times higher than the amount that had been collected by the private collection agencies, according to the report. Following the report’s publication, a number of Democratic Senators put forth a bill that would end the program, but that bill has not moved in the month since its introduction.
If enacted, the bill would set an income threshold for accounts that were eligible to be sent to private collection agencies. Individuals with annual incomes that are less than 250% above the federal poverty level would be exempt from having their accounts placed with private collection agencies. The Taxpayer Advocate’s report indicated that the private debt collection program appears to be targeting lower-income individuals. Nearly one in five of the 4,141 individuals who have made payments to a private collection agency and filed a tax return had an income below the federal poverty line.
The changes to the private debt collection program are just one of many provisions in the bill, which would also provide individuals with better access to their files and more consumer protections while also requiring the IRS to improve its customer service strategy.
