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Washington, D.C. — With the deadline less than a day away to end or extend its tax collection privatization program, the Internal Revenue Service (IRS) decided to shut down the program, making a decision the leader of the union representing IRS employees called “a victory for taxpayers and the country.”

President Colleen M. Kelley of the National Treasury Employees Union (NTEU) applauded both the agency decision not to renew the contracts of the two private companies, and the view expressed by IRS Commissioner Douglas Shulman that agency employees are much more cost-effective and helpful to taxpayers. For more than five years, NTEU spearheaded a campaign to call attention to the flaws of the program, garnering bipartisan Congressional backing and a statement of support by then-presidential candidate Barack Obama.

In ending the contracts, Shulman noted that a study of the cost-effectiveness of the private tax collection program showed “it is reasonable to conclude” that when working similar inventories, “IRS collection is more cost-effective than the contractors.”

This squares with NTEU’s longstanding and strongly-held position. “This result, a long time coming in the face of growing opposition to the program, is not only a good decision by the IRS, it is the right decision,” said President Kelley. “It reaffirms what NTEU has said repeatedly—that given the tools and resources, no one can perform the work of the federal government better than federal employees. This is an important vote of confidence for IRS employees.”

The NTEU leader has consistently called for additional IRS resources and personnel, both for collection and customer service activities.

In announcing its decision, Commissioner Shulman noted the IRS anticipates hiring more than 1,000 additional collection personnel this fiscal year, and that IRS employees have a range of options available to them in attempting to resolve collection cases that, by law, the private companies contracted by the IRS did not have.

These options, which take on increasing importance and relevance in today’s exceptionally difficult economic circumstances, include the offer-in-compromise program, under which a portion of a taxpayer’s obligation can be forgiven; settlement agreements providing for delayed or skipped payments, depending on circumstances; and other steps, the NTEU leader said.

Since the program was first proposed early in the Bush administration, President Kelley led the fight against the IRS use of private tax collectors, citing its cost, its potential for abusive treatment of taxpayers and the serious risk it poses to taxpayers’ personal and sensitive information.

She was joined in her call for an end to the program and repeal of the legislation under which it was authorized by a growing and bipartisan number of House members and senators, as well as by a broad range of consumer and public interest groups.

Kelley expressed her appreciation for the leadership of key members of Congress who early on recognized the folly of outsourcing IRS tax collection work including Rep. Chris Van Hollen (D-Md.), Senator Byron Dorgan, (D-N.D.), Rep. Steven Rothman, (D-N.J.), Rep. John Lewis (D-Ga.), Senator Richard Durbin, (D-Ill.), Rep. Charles Rangel (D-N.Y.), Rep. Jose Serrano (D-N.Y.), Rep. Earl Pomeroy (D-N.D.), Rep. Bill Pascrell (D-N.J.), Rep. Frank Wolf, (R-Va.), and House Majority Leader Steny Hoyer, (D-Md.).

“Treasury Secretary Geithner’s announcement that the IRS will end the misguided practice of private tax collection is welcome and long overdue,” said Rep. Van Hollen, a leading congressional advocate for terminating the IRS’ private debt collection authority. “Data has repeatedly shown the IRS to be far more cost-effective at collecting back taxes and far less prone to abusing taxpayers’ rights. This decision is a resounding victory for good government and the public it serves.”

The IRS National Taxpayer Advocate Nina Olson was a consistent and vocal critic of the viability of the program, calling for its repeal in annual reports to Congress and in Congressional testimony.

Just last Tuesday, in a joint letter, a coalition of 16 consumer rights organizations, federal unions and public interest groups, led by NTEU, called on the Senate to retain in the fiscal 2009 Omnibus Appropriations bill a provision to prevent the IRS from spending any appropriated funds this fiscal year for this program.

Additionally, pending legislation, introduced by Rep. John Lewis (D-Ga.), chairman of the Ways and Means Oversight Subcommittee, would repeal IRS authority for the program; President Kelley said NTEU will continue to press for its enactment.

“The IRS has seen a 24 percent overall decrease in staffing levels during the past 12 years despite staggering increases in workload,” said President Kelley. “I look forward to working with Commissioner Shulman to rebuild and reinvest in the IRS workforce to ensure that the agency responsible for collecting the vast majority government’s revenue has the tools and resources they need to get the job done for the American people.”

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