NTEU Blasts Plan to Hire Troubled Industry for Tax Collection Work

Press Release November 5, 2015

Washington, D.C.—The head of the National Treasury Employees Union (NTEU) blasted the House for moving forward with plans to outsource the Internal Revenue Service’s (IRS) tax-collection work to private collection agencies (PCAs) to finance a long-term extension of federal highway programs.

“The House gave the green light to debt collectors even as the Federal Trade Commission (FTC) was announcing an expansive program to crack down on abusive debt-collection tactics. That’s just wrong,” NTEU National President Tony Reardon said. “The debt-collection industry is one of the most complained-about industries.”

The Senate-passed highway bill that won the House’s approval today contains another harmful offset, one that would divert Customs user fees from border security efforts to unrelated transportation projects. NTEU vowed to fight both provisions.

The FTC today announced a nationwide crackdown involving 30 law enforcement actions by federal, state, and local law enforcement authorities, including a major effort by the New York attorney general, against collectors who use illegal tactics such as harassing phone calls and false threats of litigation, arrest and wage garnishment.

Outsourcing tax collection work could unleash a fresh round of abuse on vulnerable taxpayers, the NTEU president said. In a May 2014 letter to the Senate Finance Committee, National Taxpayer Advocate Nina Olson wrote that nearly 80 percent of the cases PCAs handle will involve low-income taxpayers who lack the resources to settle their tax debts. These taxpayers “will feel pressured into making commitments they cannot afford and may not follow through on,” Olson warned.

Reardon agreed and added, “Since low-income taxpayers won’t be able to pay, the PCA program would once again be destined for failure and taxpayers won’t get the help they need. Only IRS employees can assist taxpayers with payment plans and other programs intended to help them become compliant.”

Civil-rights groups like the NAACP and the National Council of La Raza and consumer-advocacy organizations like the National Consumer Law Center also oppose the PCA provision. In a recent letter to the House Rules Committee, Reardon wrote that efforts to use PCAs to collect federal taxes were scuttled twice in the past 20 years after the government lost money and taxpayers complained of strong-arm tactics by collection agencies.

The PCA proposal also comes at a time when telephone tax scams are proliferating. The IRS commissioner has testified in Congress that IRS-impersonation telephone scams are a growing and serious problem. IRS said taxpayers are threatened with arrest, deportation or suspension of a business or driver’s license if they don’t pay up.

Forbes has reported that such scams are a major problem for seniors and that nearly 4,550 victims have collectively paid over $23 million to scammers posing as IRS employees.

The NTEU leader said Congress should be working to find a long-term revenue source for highway and transit programs. He reiterated NTEU’s strong commitment to modifying the highway bill during negotiations between House and Senate conferees.

President Reardon also thanked Rep. John Lewis (D-Ga.) and Rep. Sander Levin (D-Mich.) for leading the fight to eliminate the PCA and Customs fees language from the underlying House bill. “They had a tough fight from the outset and I applaud them for showing political courage,” he said.

The Lewis amendment would have deleted the provision reviving the failed PCA experiment, a proven waste of taxpayer dollars. The Levin amendment sought to prevent increases in Customs user fees from being diverted for unrelated infrastructure projects. The House Rules Committee declined to make in order both those NTEU-backed amendments, essentially rejecting them.

“We’re disappointed but not deterred,” Reardon said. “NTEU is committed to continuing its fight against these offsets in a conference committee. I don’t think anyone believes these are the best choices to provide for long-term stable transportation funding. Even the authors of the bill have called them placeholders.”

NTEU, the nation’s largest independent federal-employee union, represents 150,000 employees in 31 agencies and departments.

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