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Washington, D.C.—The leader of the largest independent union of federal employees today called for full public disclosure by the Internal Revenue Service (IRS) of its criteria and process for selecting private sector debt collection companies to be used in pursuing tax debts from U.S. taxpayers in return for a generous bounty.

According to news reports, the ill-conceived plan recently encountered a forced delay of up to three months or more because of protests in how the agency selected the initial three firms. The questions surrounding the process are “further evidence that taxpayers can and should be very skeptical of this contracting scheme,” said Colleen M. Kelley, president of the National Treasury Employees Union (NTEU).

In fact, one of the firms selected by the IRS has had previous legal troubles, as detailed in a recent article in the publication, Tax Notes. In 2002, a then-named partner with the firm was indicted for bribing city officials to win a contract to collect unpaid fines and fees. He pled guilty in 2004 to conspiracy to commit bribery and bank fraud and was fined $1 million and sentenced to 30 months in jail.

Two losing private sector debt collection companies filed protests of the IRS contract award to three other private firms, triggering the delay while the Government Accountability Office (GAO) investigates.

NTEU has been leading the fight against the tax debt privatization program, emphasizing the serious risks to taxpayer privacy as well as the economic cost to taxpayers. IRS employees could collect far more revenue at a small fraction of the cost associated with using contractors.

All this, said President Kelley, is “a clear indication” that the IRS contracting process is “not

transparent and, in fact, is highly flawed.” Those flaws exist, she said, alongside continuing problems with the agency’s historic weak oversight of private contractors.

President Kelley noted that when the IRS tried a similar program of private tax debt collection in 1996, it failed miserably, with low collections and multiple documented violations by private sector debt collectors of the Fair Debt Collection Practices Act.

That failed program is only one example of the agency’s poor record of contractor oversight, she added. In another instance, employees of a major bank acting as an IRS contractor destroyed or lost substantial numbers of tax payments worth 1 billion, resulting in criminal charges against some bank employees. The GAO has been sharply critical of the agency’s ability to oversee the work of its contractors.

“There is a lot wrong with the tax debt privatization program,” the NTEU leader said. “I’m not at all surprised with the difficulty the agency is having getting it off the ground.” NTEU, she added, will continue to monitor every aspect of the program, and is strongly supporting legislation—H.R. 1621—that would revoke the IRS’s authority to hire private sector debt collectors to pursue tax debts.

NTEU is the largest independent federal union, representing some 150,000 employees in 30 agencies and departments, including 90,000 in the IRS.