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Washington, D.C.—A broad coalition of groups, including the National Treasury Employees Union (NTEU), is urging congressional support for legislation soon to be introduced in the House of Representatives that would express as the sense of Congress opposition to the collection by private companies of tax debts. The IRS is proposing to pay private debt collectors up to a 25 percent commission to collect unpaid tax debts.

In a letter to every House member, the coalition urged support for sense-of-the-Congress legislation that is to be introduced by Rep. Chris Van Hollen (D-MD). In addition to NTEU, the letter was sent by Citizens for Tax Justice, the Consumer Federation of America, Consumers Union, National Consumer Law Center and the National Consumers League.

NTEU President Colleen M. Kelley said the letter represents an example of “the growing opposition” to the plan, which will jeopardize the rights and privacy of American taxpayers.” House members were urged to become original co-sponsors of the Van Hollen bill.

The letter recounted a failed 1996 pilot project for private collection of tax debts, and noted that contractors neither observed the dictates of the Fair Debt Collection Practices Act nor protected the security of sensitive taxpayer information.

It noted, as well, that the IRS Restructuring and Reform Act of 1998 (RRA) specifically prevents employees or supervisors at the IRS from being evaluated on the amount of collections they bring in.

“But now,” the letter said, “the IRS wants to pay private collection agencies out of their tax collection proceeds, which will clearly encourage overly aggressive tax collection techniques—the exact dynamic RRA 98 sought to avoid.”

What’s more, the letter to House members criticized the IRS for proposing to turn tax collection responsibilities over to an industry that has a long record of abuse. It cited the year 2002 as an example. In that year, the Federal Trade Commission received 25,185 consumer complaints about debt collection agencies—“giving debt collectors the impressive title of the FTC’s most complained-about industry.”

In addition to all this, President Kelley has said the proposal would result in the collection of only a fraction of the revenue that could be brought in by IRS employees.

The administration’s proposal would cost roughly $250 million to collect $1 billion over 10 years. That’s a net return of only $3 for every $1 invested. On the other hand, IRS reports show that IRS employees could collect $1 billion in taxes for an investment of only $30 million in one year. That’s a net return of over $30 for each $1 invested.

NTEU is the largest independent federal union, representing some 150,000 employees in 29 agencies and departments.