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Washington, D.C.—Using the nation’s most complained-about industry—private debt collection companies—to pursue tax debts is a costly and ineffective plan that opens the door to serious misuse of private and sensitive taxpayer information, the leader of the union representing Internal Revenue Service (IRS) employees said today.

President Colleen M. Kelley of the National Treasury Employees Union (NTEU) said that as both House and Senate tax-writing committees consider various tax bills, it is “critically important to taxpayers” that Congress reject any attempts to turn over tax collection to private companies.

The dangers of doing so, President Kelley said, will be emphasized by NTEU in a full-page ad the union is running in Monday’s edition of Roll Call, an influential Capitol Hill newspaper that covers legislative matters.

“We are pressing the point with members of Congress and the public,” President Kelley said, “that legislative attempts to allow private debt collection companies to collect tax debts on a commission basis is unwise and dangerous public policy.”

Under proposals advanced by the administration, the IRS would be permitted to pay debt collection companies a bounty of up to 25 percent of the money they collect. In addition to NTEU’s

opposition to the idea, a broad range of well-respected nationwide consumer groups also have expressed their opposition. These groups are the Consumer Federation of America, Consumers Union, National Consumer Law Center, the National Consumers League and Citizens for Tax Justice.

The Roll Call ad emphasizes that privatizing tax collection is a proven bad idea, tried by the IRS in a failed pilot program in 1996 that led to serious abuses of taxpayers when private contractors failed to follow the requirements of the Fair Debt Collection Practices Act.

An even more serious problem, however, is the risk that private and sensitive taxpayer information will be misused by the debt collection agencies—an industry whose practices generated more than 25,000 consumer complaints to the Federal Trade Commission in 2002.

“The federal government should not be taking steps to further erode the privacy of Americans,” President Kelley said, “and that is exactly what this proposal would do.”

She likened the tax debt proposal to revelations this week that JetBlue Airways Corp. had shared the names, addresses and phone numbers of some one million passengers with a private contractor doing business with the Army—a matter that generated a storm of protests focusing on individual privacy.

“We need look no farther than this JetBlue debacle,” President Kelley said, “to see the dangers inherent in sharing private information. It will leak and be subject to serious misuse,” she said.

What’s more, she criticized the tax privatization proposal as being far from cost-effective. Using private debt collectors would cost about $250 million to collect $1 billion over ten years. That is a net return of only $3 for every dollar collected.

On the other hand, using IRS employees for that work would result in the collection of $1 billion in taxes for an investment of only $30 million in additional resources in one year. That net return is more than $30 for every $1 invested—more than ten times the net return to the Treasury from the use of private contractors.

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