What? Private Tax Collectors?

As Benjamin Franklin said: “Our Constitution is in actual operation; everything appears to promise that it will last; but in this world nothing is certain but death and taxes.”

Collecting taxes, the lifeblood of government, is a hard job, and of course the Internal Revenue Service doesn’t collect every dollar owed to Washington. However, a pending bill that would allow private debt collectors and private lawyers to collect delinquent taxes raises strong concerns about privacy rights.

A provision in the Treasury-Postal Service spending bill, which has been held up in conference committee by an unrelated controversy, would direct the IRS to spend $13 million on a pilot program that would award contracts to private debt collection agencies. These firms would gain access to Social Security numbers, income figures and other taxpayer information. Wouldn’t that open the door to abuse of such information?

IRS Commissioner Margaret Milner Richardson questions whether taxpayers’ rights could be protected despite safeguards in the bill. She also worries that private debt collectors would commingle tax and non-tax data and wonders whether private collectors could function successfully without the power to attach wages, impose liens and seize property.

Richardson’s concerns are understandable, but so are those of the House member calling for the pilot project. Rep. Jim Ross Lightfoot (R-Iowa) argues that the change is needed to improve governmental efficiency. Certainly the IRS could use some help. Although the agency collects $26 for every $1 spent on telephone inquiries to delinquent taxpayers and $10 per $1 spent on more complicated cases, according to a Government Accounting Office report, IRS collections have dropped by about 8% during the last five years.

Congress could help by financing a pilot program to teach IRS officials the collection skills that work well in the private sector. That method could improve the IRS collection rate, without allowing private companies to become as intrusive as the tax collection agency. Collecting taxes should remain a government responsibility.