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In approving tax legislation that includes a provision to end Internal Revenue Service (IRS) use of private debt collectors, the House of Representatives has taken a vital step forward in ending a costly program that puts taxpayers’ personal information at serious risk, the leader of the union representing tens of thousands of IRS employees said today.

President Colleen M. Kelley of the National Treasury Employees Union (NTEU) applauded House approval of H.R. 3996, the “Temporary Tax Relief Act of 2007,” introduced by Ways and Means Committee Chairman Charles Rangel (D-N.Y.) The measure, approved by a vote of 216 to 193, includes language that would repeal IRS authority to use private debt collectors to pursue tax debts.

The vote follows revelations from the IRS that the program continues to fall far short of its revenue projections. Contracted collection agencies collected only $32.13 million in gross revenue through Sept. 30, far short of the $45.7 to $65 million projected for the year. All records indicate the privatization program will not break even this year.

The bill includes the text of H.R. 3056, legislation approved by the House last month that also would repeal such IRS authority. That measure, in turn, was modeled on a stand-alone bill, H.R. 695, introduced by Rep. Chris Van Hollen (D-Md.) and strongly supported by NTEU, which would have ended the IRS’s misguided, costly program of using private debt collectors.

President Kelley said NTEU will continue to press for approval of such legislation in the Senate. In particular, NTEU will push for passage of S. 335, introduced by Sen. Byron Dorgan (D-N.D.), to accomplish that purpose.

NTEU has been steadfast in its opposition to the IRS program and has drawn to its side a variety of public interest groups, a growing bipartisan number of members of Congress and the IRS’s own National Taxpayer Advocate, who criticized the program as not cost-effective and called for its repeal.

“The tax debt privatization program is far more costly than using IRS employees to perform the work, and has fallen short of revenue projections while costing more in start-up expenses than anticipated,” President Kelley said. The cost has generated considerable concern among members of Congress.

On that subject, the IRS itself has admitted that using private debt collectors is far more expensive that having the work done by agency employees. IRS employees would generate a return on investment of 13 to 1, significantly higher than the 4 to 1 return through the use of private collectors. Such companies are paid a bounty of up to 24 percent of the money they collect.

From the beginning, NTEU has warned—among other dangers—of abusive tactics by the collection companies; that concern was underscored as part of a Ways and Means Committee hearing in May, during which egregious examples of abusive behavior by private debt collectors were detailed.

NTEU is the largest independent federal union, representing 150,000 employees in 31 agencies and departments.