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Washington, D.C.—In a letter to members of the Senate Finance Committee, a coalition of major public interest groups and the nation’s largest independent union of federal employees today urged rejection of efforts to contract to private debt collection agencies the collection of tax debts.

The letter was signed by the National Treasury Employees Union (NTEU), Consumer Federation of America, National Consumer Law Center, the National Consumers League and Citizens for Tax Justice.

It urged Senate opposition to an amendment that may be offered tomorrow to S. 1637, international tax legislation being taken up by the Senate Finance Committee.

NTEU President Colleen M. Kelley has been leading the fight against a proposal which would allow the Internal Revenue Service to contract to private debt collection companies the collection of tax debts in exchange for a bounty of up to 25 percent of the amounts collected.

“This proposal will cost the taxpayers more money than having this work done by IRS employees,” the letter said, “and will jeopardize the rights and privacy of American taxpayers.”

The coalition reminded senators that two pilot programs were authorized by Congress to test private collection of tax debts in 1996 and 1997. “The 1996 pilot was so unsuccessful,” it wrote

“that the 1997 project was cancelled.”

The organizations stressed that during the 1996 pilot, contractors not only violated the Fair Debt Collection Practices Act, but failed to protect the security of sensitive taxpayer information.

An IRS internal audit found that contractors made hundreds of calls to taxpayers during times prohibited by the law, including calls that were placed as early as 4:19 a.m. In addition, they said, the contractors “did not bring in anywhere near the dollars they projected, and the pilot caused a $17 million net loss.”

In urging senators to “oppose any amendment that would authorize this risky scheme,” the coalition members emphasized that the IRS is proposing to turn tax collection responsibilities over to an industry “that has a long record of abuse.”

They noted, for example, that in 2002, the Federal Trade Commission received 25,185 consumer complaints about debt collection agencies—giving debt collectors the impressive title of the FTC’s most complained-about industry.

As the largest independent federal union, NTEU represents some 150,000 employees in 29 agencies and departments, including more than 97,000 in the IRS.