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Washington D.C.—The leader of the nation’s largest independent union of federal employees today took sharp issue with a White House Statement of Administration Policy (SAP) challenging administration claims that the IRS program to outsource tax collection work will yield millions of dollars in 2007. The program is not expected to break even until sometime in 2008.

As the House of Representatives prepared to act on the Financial Services and General Government Appropriations Act for Fiscal Year 2008, the White House issued its objections to pro-federal employee provisions of the bill including a 3.5 percent federal employee pay raise, A-76 contracting reforms and a reduction in funding for IRS’s private tax debt collection program to $1 million but has issued no veto threat.

“It is disappointing, but comes as no surprise that this anti-employee administration would object to fair pay for federal employees, a level playing field for federal workers in outsourcing competitions and limiting funding for IRS contractors,” said NTEU President Colleen M. Kelley.

In particular, Kelley took issue with the administration’s claims that the IRS private tax collection program would yield $22 million in 2007 and $63 million in 2008, when the program is not expected to break even until 2008. Actual start-up costs for the program, originally projected at $13 million, have been close to $71 million through fiscal year 2007. With the program having yielded only some $19.5 million thus far, it is unlikely to reach the break-even point until sometime next year, at the earliest.

NTEU has been leading the fight against the IRS use of private collection agencies to pursue tax debts in exchange for a bounty of up to 24 percent of the money they collect. Supporters have asserted the return on investment by the private collection companies is about the same as for IRS employees—at 4 to 1. But testimony before the House Ways and Means Committee by the acting IRS commissioner placed the actual return on investment (ROI) by IRS employees at 13 to 1, and the National Taxpayer Advocate put the ROI for similar efforts by the IRS at 20 to 1.

Kelley said the appropriations bill also includes a provision requiring the IRS to report to Congress on what is being done to retrain IRS employees that are being laid off as a result of electronic filing to do collections work, rather than farming it out to private tax debt collectors.

In the SAP, the administration also declares the IRS is making “major progress” in dealing with taxpayer rights and information security problems. The IRS, however, using only information reported by the debt collectors, has listed at least 72 taxpayer complaints since last fall alone, including violations of the Fair Debt Collection Practices Act (FDCPA) and contract violations. This excludes any complaints about the program lodged with consumer protection agencies.

“By restricting funding, Congress has taken a giant step in expressing serious concerns about privatizing the inherently-governmental work of the IRS,” said President Kelley. “NTEU will not rest until this misguided program is repealed once and for all and the work of the IRS is returned to IRS employees, who perform it more efficiently and have the confidence of taxpayers.”

As far as the administration’s objections to the pay and contracting provisions, the NTEU leader said a fair pay raise of 3.5 percent for federal employees was critical to begin to close the gap between federal pay and private sector pay and to government recruitment efforts.

And, she said, the administration’s definition of “uneven protest rights” means that contractors would no longer have the upper-hand in contracting competitions.

“The federal contractor workforce now far exceeds the number of federal employees. Too often, critical government functions are being performed by unaccountable contractors at a higher cost, who lack the commitment that drives people to public service in the first place,” Kelley said.

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