[Congressional Record Volume 152, Number 111 (Monday, September 11, 2006)]
[Senate]
[Pages S9310-S9311]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DORGAN (for himself, Mrs. Murray, Ms. Mikulski, Mr. Leahy, 
        Mrs. Feinstein, Mr. Akaka, Mr. Kerry, Mr. Kennedy, and Mr. 
        Lieberman):
  S. 3887. A bill to prohibit the Internal Revenue Service from using 
private debt collection companies, and for other purposes; to the 
Committee on Finance.
  Mr. DORGAN. Mr. President, today I am joined by Senator Murray and 
seven of our Senate colleagues in introducing legislation to stop the 
Internal Revenue Service's plan to outsource part of its tax collection 
responsibilities to private collection companies.
  It would be a serious mistake for the Internal Revenue Service (IRS) 
to move ahead with its controversial tax debt collection privatization 
plan. When the IRS attempted a similar plan in 1996, it failed 
miserably. Mistakes were made at every turn. Taxpayers were harassed by 
private debt collectors. In many instances, private debt collectors 
violated Federal debt collection laws and confidential taxpayer 
information was not properly secured.
  Serious concerns have been raised by tax experts, including the 
National Taxpayer Advocate, that the new IRS initiative will suffer 
from the same kinds of maladies. It is my understanding that the IRS 
intends to share more than 2.5 million taxpayer accounts with ten 
private collection companies when its new plan is fully implemented. 
There is troubling evidence which suggests that the IRS plan may not 
have adequate safeguards in place to protect confidential taxpayer 
information.
  Just over two years ago, a Treasury Inspector General for Tax 
Administration (TIGTA) investigation found that a contractor's 
employees committed security violations, placing IRS equipment and 
taxpayer data at risk. In some cases, TIGTA officials found that 
contractors ``blatantly circumvented IRS policies and procedures even 
when security personnel had identified inappropriate practices.''
  It is also troubling that the IRS has agreed to pay very large 
commissions of 21 to 24 percent of the amount of the tax debt collected 
by three private collection firms at the outset of its initiative. Some 
tax experts understand what others are choosing to ignore: paying a 
commission based on the firms' success increases the potential for 
overzealous collection practices and the misuse of sensitive taxpayer 
information. Private debt collection agencies are driven by profit 
motives, not public service.
  In addition, the IRS admits that if it hired more employees for this 
purpose, not private collectors, far more revenues would be deposited 
in the U.S. Treasury fund. It is astounding that the IRS appears ready 
to pay nearly a quarter for every dollar collected by private 
collection firms, when internal IRS reports suggest that it would cost 
the Federal Government just 3 pennies on a dollar to have trained IRS 
employees collect tax debts that are owed. At a time of exploding 
deficits and Federal debt, the IRS plan to use of private debt 
collectors would be an inexcusable waste of taxpayer money.
  Everybody needs to pay the taxes they owe. If they do not, however, 
professional IRS employees, not private collectors in search of 
profits, should be the ones to ensure that outstanding tax debts are 
paid. If the IRS now says it needs more resources for tax enforcement 
and collection activities, then Congress should consider providing 
them.
  I fully agree with the independent Taxpayer Advocacy Panel's recent 
recommendation that the IRS ``should abandon all plans to outsource any 
taxpayer debts and restrict collection activities to properly trained 
and proficient IRS personnel.'' Indeed, the IRS should immediately 
reverse course and indefinitely suspend the implementation of its 
private debt collection plan.
  It was recently reported in the press that IRS Commissioner Everson 
has said the IRS will ``immediately stand down'' if the House and 
Senate act to revoke its authority to outsource tax debt collections to 
private companies. The House of Representatives has already voted to 
kill new funding for this IRS initiative. I will be pushing for a vote 
on this proposal by the full Senate at the first available opportunity.
  The IRS should act on its own to stop its planned use of private debt 
collectors and save any further expenditures of taxpayer money for this 
purpose. If not, however, I will do everything in my power to put the 
brakes on this plan in the U.S. Senate.
  There is an old adage: ``Those who cannot learn from history are 
doomed to repeat it.'' Someone needs to remind the Internal Revenue 
Service and even some in the Congress of that. I urge my colleagues to 
cosponsor this legislation and help us get it enacted into law.
  Mrs. MURRAY. Mr. President, I am glad to join my colleague, Senator 
Dorgan, and other cosponsors, in introducing legislation which would 
prevent the use of private collection agencies by the Internal Revenue 
Service. As Ranking Member of the Transportation, Treasury, the 
Judiciary, HUD, and Related Agencies (TTHUD) Appropriations 
Subcommittee, I have consistently opposed allowing the IRS the 
authority to hire private debt collectors. During Subcommittee hearings 
with the IRS, I have had the opportunity to discuss this issue at 
length with the current IRS Commissioner, Mark Everson. What I have 
learned during those conversations has not changed my mind.
  When Chairman Bond and I finally are allowed to bring the Fiscal Year 
2007 Transportation/Treasury Appropriations bill to the Senate Floor, I 
intend to offer an amendment that would effectively prohibit the IRS 
from going forward with this initiative. My amendment will be very 
similar to the bill we introduce today and the language that is already 
included in the House-passed Transportation/Treasury bill. I would 
point out, that the House Transportation/Treasury bill cleared the 
House of Representatives with the support of more than 400 Members.
  There is no question that people who owe back taxes must pay their 
debt to the government. At the same time, every taxpayer should have 
the right to interact with a professional IRS agent when it comes to 
dealing with contested tax liabilities.

[[Page S9311]]

  I'm against the use of private collection agencies (PCAs) because, 
first, I don't believe that taxpayer privacy will be adequately 
protected. When the IRS attempted the use of PCAs once before in the 
1990s, it was a dismal failure. The IRS has not had a good track record 
of protecting taxpayer information and the Treasury Department's 
performance in providing information security protections to protect 
data confidentiality has worsened.
  Second, I am concerned that private debt collectors will not show the 
level of professionalism, sensitivity, and respect that taxpayers 
deserve. In 2005, the Federal Trade Commission received more consumer 
complaints about private debt collectors than any other industry.
  Due to the nature of the debts that the IRS intends to transfer to 
PCAs, the likely result will be that these agencies will end up going 
after the most vulnerable taxpayers in our society. We should not allow 
a system to emerge where better-off taxpayers get the benefit of 
interacting with a professional IRS agent, while economically-
disadvantaged taxpayers are relegated to the harassing tactics of 
private collection agencies.
  Third, I am deeply concerned with the cost-effectiveness of this 
initiative. The IRS Commissioner, himself, testified that it would be 
more cost-effective for the IRS to collect these debts than to contract 
them out to PCAs. Initially, I am told that it will require 55 IRS 
personnel to oversee 75 private tax collectors. Taken as a whole, I 
have to wonder whether the Federal Treasury will really benefit at all 
from this initiative.
  Finally, the IRS should not be moving ahead with this activity while 
Congress is still debating its merits. More than 400 Members of the 
House approved a bill that included a prohibition on outsourcing tax 
collection. The IRS should suspend this effort immediately until the 
Congress has debated its fate and reached a final judgment.

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