Yet another installment of things you couldn't make up
Sometimes, it looks like the Republicans go out
of their way to showcase their own incompetence and corruption. In today's New York Times we find that the IRS is
being forced to outsource it's delinquent tax collection activities because
Congress refuses to fund the people it needs to do the job. Private collection
agencies will take over the task. The deal has
everything:
First, the incompetence:
Within two weeks, the I.R.S. will turn over data on 12,500 taxpayers — each of whom owes $25,000 or less in back taxes — to three collection agencies. Larger debtors will continue to be pursued by I.R.S. officers.
The move, an initiative of the Bush administration, represents the first step in a broader plan to outsource the collection of smaller tax debts to private companies over time. Although I.R.S. officials acknowledge that this will be much more expensive than doing it internally, they say that Congress has forced their hand by refusing to let them hire more revenue officers, who could pull in a lot of easy-to-collect money.
The private debt collection program is expected to bring in $1.4 billion over 10 years, with the collection agencies keeping about $330 million of that, or 22 to 24 cents on the dollar.
By hiring more revenue officers, the I.R.S. could collect more than $9 billion each year and spend only $296 million — or about three cents on the dollar — to do so, Charles O. Rossotti, the computer systems entrepreneur who was commissioner from 1997 to 2002, told Congress four years ago.
Next corruption:
One of the three companies selected by the I.R.S. is a law firm in Austin, Tex., where a former partner, Juan Peña, admitted in 2002 that he paid bribes to win a collection contract from the city of San Antonio. He went to jail for the crime.
Last month the same law firm, Linebarger Goggan Blair & Sampson, was again in the news. One of its competitors, Municipal Services Bureau, also of Austin, sued Brownsville, Tex., charging that the city improperly gave the Linebarger firm a collections contract that it suggested was influenced by campaign contributions to two city commissioners.
Lastly, screw the little guy:
Taxpayer rights are at risk with privatization, Nina B. Olson, the I.R.S. taxpayer advocate, warned Congress earlier this year. “Because private collectors will operate under rules of profit maximization rather than the I.R.S.’s customer-service based policy,” she warned, the private collectors may have less incentive to safeguard taxpayer rights.
Al Cleland, a retired I.R.S. tax collector in Minnesota, predicted that using private collectors would cause some debtors to owe more.
“We always told people to get current on their taxes first, so they would not have more penalties added, and then work on paying off their back taxes,” Mr. Cleland said. “A private collection agency has no incentive to tell taxpayers that, so people will pay more penalties.”
Someone else is getting screwed here too: those of us who pay our taxes. Note the disparity between expected collection rates with and without the program. Congress is essentially saying that it wants lots more people to get away without paying their taxes, meaning that the suckers who pay will be picking up the slack.
UPDATE: The incomparable Krugman makes the point that outsourcing tax collection is reminiscent of the old medieval tax farmers . He also calls a spade a spade: our "consultants" in Iraq are mercenaries.
First, the incompetence:
Within two weeks, the I.R.S. will turn over data on 12,500 taxpayers — each of whom owes $25,000 or less in back taxes — to three collection agencies. Larger debtors will continue to be pursued by I.R.S. officers.
The move, an initiative of the Bush administration, represents the first step in a broader plan to outsource the collection of smaller tax debts to private companies over time. Although I.R.S. officials acknowledge that this will be much more expensive than doing it internally, they say that Congress has forced their hand by refusing to let them hire more revenue officers, who could pull in a lot of easy-to-collect money.
The private debt collection program is expected to bring in $1.4 billion over 10 years, with the collection agencies keeping about $330 million of that, or 22 to 24 cents on the dollar.
By hiring more revenue officers, the I.R.S. could collect more than $9 billion each year and spend only $296 million — or about three cents on the dollar — to do so, Charles O. Rossotti, the computer systems entrepreneur who was commissioner from 1997 to 2002, told Congress four years ago.
Next corruption:
One of the three companies selected by the I.R.S. is a law firm in Austin, Tex., where a former partner, Juan Peña, admitted in 2002 that he paid bribes to win a collection contract from the city of San Antonio. He went to jail for the crime.
Last month the same law firm, Linebarger Goggan Blair & Sampson, was again in the news. One of its competitors, Municipal Services Bureau, also of Austin, sued Brownsville, Tex., charging that the city improperly gave the Linebarger firm a collections contract that it suggested was influenced by campaign contributions to two city commissioners.
Lastly, screw the little guy:
Taxpayer rights are at risk with privatization, Nina B. Olson, the I.R.S. taxpayer advocate, warned Congress earlier this year. “Because private collectors will operate under rules of profit maximization rather than the I.R.S.’s customer-service based policy,” she warned, the private collectors may have less incentive to safeguard taxpayer rights.
Al Cleland, a retired I.R.S. tax collector in Minnesota, predicted that using private collectors would cause some debtors to owe more.
“We always told people to get current on their taxes first, so they would not have more penalties added, and then work on paying off their back taxes,” Mr. Cleland said. “A private collection agency has no incentive to tell taxpayers that, so people will pay more penalties.”
Someone else is getting screwed here too: those of us who pay our taxes. Note the disparity between expected collection rates with and without the program. Congress is essentially saying that it wants lots more people to get away without paying their taxes, meaning that the suckers who pay will be picking up the slack.
UPDATE: The incomparable Krugman makes the point that outsourcing tax collection is reminiscent of the old medieval tax farmers . He also calls a spade a spade: our "consultants" in Iraq are mercenaries.
Posted: Sunday - August 20, 2006 at 08:21 PM
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Published On: Apr 17, 2007 07:20 PM
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Published On: Apr 17, 2007 07:20 PM