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Washington, D.C.—Five major consumer and public interest groups have joined with the National Treasury Employees Union (NTEU) in urging Congress to reject a proposal to allow the Internal Revenue Service to collect taxes using private debt collectors.

In a joint letter to every member of the House of Representatives, NTEU and the public interest coalition sharply criticized the tax collection proposal, which is contained in corporate tax legislation, H.R. 4520, expected to be voted on by the House Ways and Means Committee on Thursday.

Their letter came just one day after a group of 17 Republican House members sent a letter to Speaker Dennis Hastert, urging the Republican leadership to stand firm in the House’s previous opposition to the use of private tax collectors. The provision to be voted on this week is identical to one that was dropped from an earlier version of the bill.

In addition to NTEU, the letter was signed by the Consumer Federation of America, National Association for the Advancement of Colored People (NAACP), National Association of Retired Federal Employees (NARFE), National Consumer Law Center on behalf of its low-income clients, and the National Consumers League.

Among other things, the groups emphasized that private tax collection is much less cost-effective than using IRS personnel. The IRS itself, they said, reported that additional agency funding of $296 million for compliance would result in another $9.47 billion in known tax debt collections—a net return of $31 for every $1 invested.

By contrast, the administration’s privatization scheme would, in the best case, result in a net return of only $3 for every taxpayer dollar spent, they said.

The groups previously have raised serious concerns about the impact of the proposal on taxpayer privacy as well as the likelihood of harassment of taxpayers by private sector debt collectors—as occurred when a pilot program of private tax collectors was tried by the IRS in 1996.

The organizations called the proposal a “risky scheme,” noting that its provision to pay private debt collectors a 25 percent commission would encourage “overly aggressive tax collection techniques.” And that, the letter emphasized, is “the exact dynamic” that Congress sought to avoid when it enacted the IRS Reform and Restructuring Act of 1998 (RRA).

That law specifically prevents IRS employees or supervisors from being evaluated on the amount of collections they bring in. “But now,” the letter said, “the IRS wants to pay private collection agencies out of their tax collection proceeds.”

What’s more, they argued, the legislation would allow the IRS to turn tax collection responsibilities over to an industry “that has a long record of abuse.” In 2003, the Federal Trade Commission received 34,543 consumer complaints about debt collection agencies. Not only was that a 37 percent increase over complaints filed in 2002, it allowed the debt collection industry to retain “the impressive title” of the FTC’s most complained-about industry, the letter said.

NTEU, which has been leading the fight against privatizing tax collections, is the largest independent federal union, representing some 150,000 employees in 29 agencies and departments, including some 98,000 in the IRS.