[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 335 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                 S. 335

   To prohibit the Internal Revenue Service from using private debt 
             collection companies, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 18, 2007

  Mr. Dorgan (for himself, Mrs. Murray, Ms. Mikulski, Mr. Akaka, Mr. 
   Leahy, Mr. Levin, Mr. Kennedy, Ms. Cantwell, Mr. Rockefeller, Mr. 
Kerry, Mr. Inouye, Mr. Cardin, Mrs. Boxer, Mr. Lieberman, Mr. Menendez, 
  Mrs. Feinstein, and Mr. Lautenberg) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To prohibit the Internal Revenue Service from using private debt 
             collection companies, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. PROHIBITION ON USE BY INTERNAL REVENUE SERVICE OF PRIVATE 
              DEBT COLLECTORS.

    (a) Findings.--Congress finds the following:
            (1) The Internal Revenue Service announced plans to 
        outsource part of its tax debt collection responsibilities to 
        private debt collection companies beginning on September 7, 
        2006.
            (2) The Internal Revenue Service intends to turn over 
        confidential information involving over 2,500,000 taxpayer 
        accounts to 12 private companies for debt collection purposes 
        when its plan is fully implemented.
            (3) Recent evidence continues to suggest that the Internal 
        Revenue Service does not have adequate systems in place to 
        ensure that taxpayer information shared with private debt 
        collection companies is properly secured and that such 
        information will not be accessible to those who would misuse 
        such information.
            (4) During the initial phase of its plan, the Internal 
        Revenue Service has agreed to pay very large commissions of 21 
        to 24 percent of the amount of tax debt collected by 3 private 
        debt collection companies on cases that the Internal Revenue 
        Service considers relatively simple.
            (5) The Internal Revenue Service failed miserably when it 
        attempted a similar tax debt collection privatization plan in 
        1996 and found that private debt collectors harassed many 
        taxpayers, violated Federal debt collection laws, and did not 
        properly secure sensitive taxpayer information as required by 
        law.
            (6) The use of Internal Revenue Service employees to 
        collect tax debt would cost only 3 cents for every dollar 
        collected while the use of private debt collectors would cost 
        almost 25 cents for every dollar collected.
            (7) The National Taxpayer Advocate, an independent voice in 
        the Internal Revenue Service for taxpayers, has called for the 
        immediate termination of the private debt collection program 
        calling it an exercise in futility and vastly more expensive 
        than the Internal Revenue Service ever imagined.
            (8) The National Taxpayer Advocate has also warned Congress 
        that private debt collection companies operating under rules of 
        profit maximization could have less incentive to provide 
        important taxpayer rights training to their employees.
            (9) The collection of tax revenue is a core function of the 
        Internal Revenue Service and appropriate Internal Revenue 
        Service staffing should be assigned to this function to achieve 
        debt collection objectives.
            (10) Taxpayers trust the Internal Revenue Service to keep 
        their tax return information confidential and expect that those 
        who collect taxes are not part of a money-making venture with 
        profit motive as the overriding principle.
            (11) The Taxpayer Advocacy Panel, a nationwide advisory 
        group appointed by the Secretary of the Treasury to improve the 
        responsiveness of the Internal Revenue Service to the needs of 
        taxpayers, has called on the Internal Revenue Service to 
        abandon all plans to outsource any taxpayer debts and to 
        restrict collection activities to properly trained and 
        proficient Internal Revenue Service personnel.
            (12) In June 2006, the United States House of 
        Representatives overwhelmingly passed a fiscal year 2007 
        spending bill funding the Internal Revenue Service that 
        included language prohibiting the Internal Revenue Service from 
        using any of such funds for its private tax debt collection 
        initiative.
            (13) A year-long Government Accountability Office 
        examination of the private debt collection program issued in 
        September 2006 found that, like the 1996 pilot, the program may 
        actually lose money by the scheduled conclusion of its initial 
        phase in December 2007.
    (b) Prohibition on Use of Private Debt Collectors.--Notwithstanding 
section 6306 of the Internal Revenue Code of 1986, the Internal Revenue 
Service shall suspend immediately and indefinitely the use of private 
debt collection companies, and no funds made available to the Internal 
Revenue Service for fiscal year 2007 and in any subsequent fiscal years 
shall be used to enter into, renew, extend, administer, implement, 
enforce, or provide oversight of any qualified tax collection contract 
(as defined in section 6306(b) of such Code).
                                 <all>