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Washington, D.C.—In spite of a Government Accountability Office (GAO) denial of a protest by a losing bidder, the leader of the National Treasury Employees Union (NTEU) joined with a member of Congress to call for the Internal Revenue Service (IRS) not to move forward with its costly, ill-advised scheme to privatize tax debt collections. The program is made all the more objectionable, she said, because the bid process made no effort to save taxpayers’ money.

NTEU President Colleen M. Kelley pointed to “a gathering firestorm of protest in Congress about efforts to turn over tax collection to private debt collectors,” including recent approval by the House of Representatives of the fiscal 2007 Transportation-Treasury Appropriations bill, containing a prohibition against the IRS from using funds to pay for tax privatization.

“The GAO decision was to reject the complaints of a losing bidder concerning the process of awarding the contracts,” President Kelley said. “That rejection says nothing about the serious problems for taxpayers underlying this poorly-conceived and costly IRS program.”

Part of the congressional firestorm is a letter today to IRS Commissioner Mark Everson from Rep. Steve Rothman (D-NJ)—author of the appropriations ban on tax debt privatization—calling on the agency to “halt this program now so that Congress has additional time to further review the Department’s private debt collection initiative.”

President Kelley was critical that cost comparison has not been part of the decision-making process. In fact, one of the losing companies said in its protest to GAO that bidders “were given no credit for proposing lower fees than ‘target’ percentages and fees recommended by the IRS.”

The NTEU leader called on IRS not to go forward because of the recent House vote on the appropriations bill. Last year, IRS held off on moving forward with closures to Taxpayer Assistance Centers (TACs) after similar congressional action. Kelley and Rothman called on the IRS to give the same consideration to this program.

Rep. Rothman said the House’s bipartisan action on the tax privatization plan “underscores some of the concerns voiced by me and my colleagues over the cost and potential abuse of taxpayers’ financial information.”

President Kelley has warned repeatedly that paying the private sector debt collectors a bounty of up to 25 percent of the money they collect is not cost-effective; and that turning taxpayers’ personal and sensitive information over to the industry that continually generates more consumer complaints than any other is to put such information at serious risk of loss or misuse. “It makes no sense,” she said, “in light of recent data security failings by government agencies, including the IRS itself.”

In the letter, Rep. Rothman stated: “But what may be most disturbing about the IRS’ proposal to outsource tax collection is the plan to turn over 2.65 million taxpayer files to private collection agencies without adequate security measures in place.”

Kelley also has warned of the likelihood of taxpayers facing the abusive tactics for which the debt collection industry is so well known. “The IRS has an exceptionally poor record of contractor oversight,” she said, “so I believe there is no chance the agency would rein in abusive employees of outside companies in this program.”

Earlier this year, the IRS awarded three contracts under authority granted to it by Congress in an unrelated corporate tax bill; 33 private companies bid for the contracts, and two of the losing bidders filed protests, delaying the program’s implementation. One withdrew its protest, leaving GAO to consider the complaints of the other protesting contractor. The IRS plans to award up to 10 contracts to private collection agencies over the next few years.

NTEU is the largest independent federal union, representing some 150,000 federal workers in 30 agencies and departments, including 90,000 in the IRS.