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News IRS to outsource some collections

  1. Aug 20, 2006 #1
    I don't think this is a wise idea. There is too much chance for abuse and in reality, the IRS can do it cheaper.


    (you may need to go through the free registration to access this link.)

    I have no idea why the company below would be one of the ones selected.

    I can see where a smaller govenment might be the goal in outsourcing here, but when it is going to cost more money than in house collection there is certainly is no logic involved in making this decision.
  2. jcsd
  3. Aug 20, 2006 #2
    No idea? I can think of one.
  4. Aug 20, 2006 #3


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    We have long debated fair taxation of the wealthy versus the poor. But I think this is just as important to discuss if not more. Having been a W2 employee my entire life, I have always paid more than my fair share of taxes (single, no children, etc.). I know too many self-employed people who do not pay taxes, and one who negotiated his debt pennies to the dollar. All are better off financially than I am. Excuse me if I resent this, as it results in increased taxes for me and those like me.

    Nothing is worse than a collection company on your case. I bet the increased results will more than cover the expense. If so, I support it. In the meantime, I hope they keep closing the loop holes used by the self-employed.
  5. Aug 20, 2006 #4
    The private comapanies will have a big incentive to drag out the collection process. The more time that passes the more the amount of penalties paid to the IRS will be. This of course means more will go to the debt collector.

    The IRS claims that even with the expense of extra agents they could collect the debts for 3 cents on the dollar. Private companies will cost the government 22 to 24 cents on the dollar.:rolleyes:
  6. Aug 20, 2006 #5


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    The agency usually buys the debt at a fixed amount and it behooves them to collect quickly. I would have to see what kind of contract the IRS is doing with these agencies.
  7. Aug 20, 2006 #6
    There has been a lot of speculation, including 25% of collection going to the contractor. I can't find a solid link on the payment method. The IRS has a list of safeguards, but it seems to pertain mostly to the knowledge and intergrity of the private collection employees. Just the word integrity used in the same sentence with, debt collector doesn't set well with many people.:rolleyes:

    To me any deal between the IRS and private debt collectors is a partnership made in hell. And I see nothing in the IRS safeguards that prevent the companies selected from outsourcing the work even further.

    The IRS safeguards also appear to require a lot of man hours to insure compliance by the private companies.
    Last edited by a moderator: Apr 22, 2017
  8. Aug 21, 2006 #7


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    What is the basis for your belief that this is anything other than the way standard collections agency relationships work? As Evo said, typically, there is no "partnership", the collections agency simply purchases the debt and walks away with it. I'm not saying you're wrong, I'm just saying I don't see anywhere a description of the actual functioning of this program.

    The only thing the article says is this:
    ...which doesn't really clarify much: it could be either.
    Last edited: Aug 21, 2006
  9. Aug 21, 2006 #8
    Basically according to the link the collected money is to go directly to the IRS. This would indicate other than a standard collections agency agreement.
    I am not concerned specifically about the contractual relationship between the IRS and collection agencies. I do have a problem, however, with the fact that IRS officials have mentioned that the cost incurred by the govenment would be higher than in house collection.

    I also have a problem with collection agencies in general. Like with any other business there are the good the bad and the just plain evil. From my own experience collection agencies have a preponderance of the bad and the evil.

    According to the links the debtors will be sending checks directly to the IRS. Whatever portion goes to the collection agencies will have to come to them from the IRS.

    I see your point here. The only thing I have read for sure is that the checks will go directly to the IRS. I have ,however, read a number of links and only posted one + one from the IRS.

    The program being outside the budget rules is another reason that I don't like it. From what I have read the outsourcing has more to do with making the IRS budget look good, than saving money.

    I will try to find some more definitive links.
  10. Aug 21, 2006 #9
    Even this doesn't explain the exact payment method. It does indicate that the payment to a private collection agency can be up to 25%

    http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.+1169: [Broken]

    I can see a big problem with privacy issues and possible loss of personal data using private companies to collect taxes.
    Last edited by a moderator: May 2, 2017
  11. Aug 21, 2006 #10


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    Well, every time you have another mouth feeding from the same pot, the share for each goes down.

    Frankly, with the power the IRS has available, I don't see why they need collections at all: they are capable of simply garnishing the wages of debtors.
  12. Aug 23, 2006 #11


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    Does "outsourcing" simply mean contracting out a job to an outside agency? I always thought it was specific to work that was contracted to workers outside of the US.
  13. Aug 23, 2006 #12
    Apparently outsourced has become sort of a one size fits all term. That was the term used by the news accounts. The IRS calls it:

    This link uses the terms privatize and outsource interchangeably.
    Last edited: Aug 23, 2006
  14. Aug 24, 2006 #13
    Apparently even the IRS is not totally confident about negating possible consumer fraud as a result of using private debt collectors.

    http://www.mailtribune.com/archive/2006/0824/biz/stories/irsscam.htm [Broken]
    Last edited by a moderator: May 2, 2017
  15. Aug 26, 2006 #14
    As far as I have seen the IRS is not terribly efficient at going after people for money owed. Private sector collectors would have much more of an incentive to collect. If they don't they don't get paid.

    I don't particularly like debt collectors since I have had my share of experiences with them but I would think they would be more cost efficient technically.
  16. Aug 26, 2006 #15
    The IRS has claimed that, even after hiring extra agents, they could do the collections in house for 3 cents per dollar. The contracts with private collection agencies will cost up to 25 cents per dollar.

    The whole point here is that the Bush administration wants the private agencies because they will not show up in the budget. Hiring extra agents would.

    This is more about politics and making the IRS budget look good temporarily than anything. (I think that was in one of the links) There will be no long term savings.

    http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=google&guid=%7B52E45914-F5D3-4ACB-B70B-674F4FA0C15C%7D&keyword= [Broken]

    I don't like those people either. I once had a collection agency calling me twice a day, even at work. It took two weeks before I finally convinced them that they were looking for a person with my same name. The other guy lived 2,000 miles away.

    If people are gutsy enough to stiff the IRS, they aren't going to worry much about a private collection agency.
    Last edited by a moderator: May 2, 2017
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