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Washington, D.C.—As millions of Americans rush to meet the April 15 deadline for filing their federal income taxes, the IRS is using this tax season to put into motion plans to hire private sector debt collectors to go after U.S. taxpayers.

“There are a number of problems with using debt collectors to collect income taxes,” said Colleen M. Kelley, president of the National Treasury Employees Union, “but the issues that top the list for me are the incredible threat to taxpayer privacy and taxpayer rights.”

Under legislation approved last year, the IRS is establishing a program that will turn over taxpayer information—including income tax figures and Social Security numbers—to private sector debt collectors, who will be paid a bounty of up to 25 percent of the money they collect. The structure of the program not only encourages aggressive behavior on the part of the debt collectors—already the most-complained about industry in America—but also opens up taxpayers to the risk of identity theft.

The NTEU leader noted the growing incidence of private companies—Choice Point, Bank of America and others—losing control of computer records containing personal information, including Social Security numbers. In one instance last year, a Columbus, Ohio, debt collection company discarded hundreds of state taxpayer records from 22 states in a metal trash container behind its offices.

“Thus far, I continue to see far more questions than answers about how this program will be set up and function,” said Kelley, who as leader of the union representing tens of thousands of IRS employees has strongly objected to the idea and has repeatedly cautioned the IRS not to move forward with the plan.

“There is a far better way to collect tax debt,” Kelley said, “one that ensures the highest return for the U.S. Treasury while protecting the rights and financial information of taxpayers. A small investment in additional IRS enforcement personnel would bring in $9 billion annually, as opposed to the $1 billion over 10 years that the debt industry expects to collect. This investment would also keep taxpayer information in the hands of experienced IRS employees.”

Nonetheless, the IRS this month will begin the process of contracting out this work. The agency’s action comes just weeks after six former employees of Mellon Bank—an IRS contractor and one of the nation’s largest banks—were indicted by the U.S. Attorney in Pittsburgh, Penn., on charges they hid, and then destroyed, some 80,000 tax returns containing checks worth more than $1 billion. They did so, the U.S. attorney said, to give the appearance of meeting contract-imposed deadlines for processing the tax documents and checks under a contract the bank held with the IRS.

“There is a record of poor contractor management and oversight by the IRS,” Kelley said, “and I have no expectations that this program, and these contractors, will be better managed than any other IRS contractor.” The IRS’s oversight of its private contractors has drawn criticism from both the Government Accountability Office (GAO) and the Treasury Inspector General for Tax Administration (TIGTA).

Kelley warned that this program was tried once before, a decade ago, and failed miserably. The 1996 pilot program performed so poorly—bringing in fewer dollars than expected even while taxpayers were harassed—that a planned follow-up for 1997 was cancelled.

The broadly-written legislation authorizing this attempt permits private debt collectors to locate and contact taxpayers; demand payment or, in some instances, an installment payment arrangement; and obtain financial information from taxpayers for use by the IRS.

NTEU is the largest independent federal union, representing some 150,000 employees in 30 agencies and departments, including some 98,000 in the IRS.