June 27, 2007

Private Collection Agencies, RIP?

The Washington Post reports that the US House of Representatives plans a vote this week on restricting funds for private collection agencies (PCA's). The PCA program, which was created by the GOP-led Congress (remember them?) in 2006, farmed out the collection of certain delinquent federal income tax debts from the IRS to private companies.

The PCA program was started because the IRS simply didn't have the resources to police collections adequately-- a persistent problem ever since Congress held McCarthy-style hearings in the late 1990s on the supposed excesses of IRS collections agents. But it immediately became clear to many that it was the wrong solution to the problem, since private collection agencies receive big commissions on their collections. It simply costs more to have PCA's do this work than to have the IRS do it.

It's not too late to tell your lawmakers what you think on this issue: visit CTJ's "action" page here to write a letter to your member of Congress.

Parenthetically, if you had to guess what an organization called the "Tax Fairness Coalition" does, would you ever, in a hundred years, guess that it's a coalition of private debt collection agencies lobbying to preserve their role in the tax collection process? Neither would I.


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