In the highway funding bill is currently under consideration, Congress is threatening to steer the Internal Revenue Service back into a familiar cul-de-sac.
The House-passed version of the bill would allow the IRS to use private collection agencies to pursue unpaid income taxes. But this is not an innovation; It is a return to a practice that was tried and previously discarded. Congress authorized the IRS to use private bill collectors back in 2004. Accounts were farmed out to collection agencies beginning in 2006, but the IRS gave up on the practice just three years later. The IRS Taxpayer Advocate later produced an analysis showing that, apart from a short-term jump as collection agencies plucked the low-hanging fruit, using collection agencies did not really generate more revenue compared to internal IRS collections. Then-IRS commissioner Douglas Shulman said, in stopping the program, "I believe this work is best done by IRS … Read More