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Washington, D.C.—A government report on use by the Internal Revenue Service (IRS) of private debt collectors to pursue taxes reveals that the program is “nothing more than an outrageous giveaway of taxpayer money to private companies,” the leader of the union representing tens of thousands of IRS employees said today.

The IRS’s own figures prove that, said President Colleen M. Kelley of the National Treasury Employees Union (NTEU), in the wake of a report on the tax debt privatization program issued by the Government Accountability Office (GAO).

The GAO report, which was prepared at the request of the chairman and ranking member of the Senate Finance Committee, shows IRS estimates of collections ranging from $55.8 million to $92 million between this September, when the program began with contracts to three private companies, and December 2007. The projected cost during that same period, however, is put by the IRS at $61.16 million—a figure appearing not to include the bounty of up to 24 percent to be paid to the private collectors. From the program’s inception, NTEU and some members of Congress have been critical of IRS awarding these contracts without a cost competition.

President Kelley said, “It is only appropriate that the GAO study is in the news on October 31st, since it is so scary for taxpayers. But for the contractors, it reveals a program that is much more like Christmas than Halloween.”

The IRS program “is a direct handout to the private sector, which won’t generate an appreciable return to the Treasury and will cost taxpayers money,” Kelley said, calling the GAO report “more evidence that the program isn’t serving taxpayers, and certainly calls into question the process for awarding of contracts to the private companies.”

The GAO was critical of the IRS’s failure to develop criteria, even at this late stage with the program underway, for determining whether or not it will be appropriate to expand the program once this initial phase is completed. The IRS has said it plans to hire as many as 10 private companies to pursue tax debts over the next year or so.

IRS officials indicated that they are considering criteria that could trigger a go/no go decision, such as the amount of taxes collected and indications of private collectors abusing taxpayers or misusing taxpayer data, GAO said—a revelation President Kelley called “shocking.”

“What does the IRS mean that it is ‘considering’ developing such criteria,” she asked. “Why weren’t the criteria for success set at the beginning, rather than after the program starts?”

“What seems more likely,” the NTEU leader warned, “is that the agency will look at the performance of its contractors, set the parameters for success to meet what already has occurred—and then declare the implementation phase a huge success.”

NTEU has been leading the fight against the use by the IRS of private collectors, pointing out—as IRS Commissioner Mark Everson has done repeatedly—that IRS employees can perform the work more efficiently and on a far more cost-effective basis.

Everson has argued that Congress won’t provide the resources the IRS needs to handle this work internally. The real problem, Kelley said, is that this administration consistently has failed to make a case with Congress for adequate resources, preferring instead to turn this work over to the private sector.

NTEU is the largest independent federal union, representing some 150,000 employees in 30 agencies and departments, including some 94,000 in the IRS.