Privatization Issues

Privatizing IRS Collections

In the trend toward privatization of government activities and services, authorities are now considering whether debt collection agencies and law firms should be hired to collect taxes from delinquent taxpayers.

  • The IRS collects more than $1.2 trillion annually.

  • Currently, unpaid and overdue taxes may exceed $150 million.

  • But collection of delinquent taxes is up this year by $1.7 billion.

  • It is estimated that for every $1 spent on IRS telephone collections, more than $20 is gained.

In the IRS appropriations bill, $13 million is included to test the idea. But might such a practice invade individual privacy and jeopardize citizens' rights?

Critics say that if IRS records are released to private agencies, and requirements to observe taxpayers' privacy rights were then imposed on the private sector, enforcing them would be a nightmare.

Source: Donald C. Alexander (former IRS Commissioner), "Hired Guns for the IRS," New York Times, October 4, 1995.

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