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Washington, D.C.—Two leading members of the Senate today called on the head of the Internal Revenue Service (IRS) to make it “a top priority” to immediately undertake a review of what they described as the “ill-advised” IRS program of using private tax collectors.

Senators Byron Dorgan (D-N.D.) and Patty Murray (D-Wash.), who sent the letter to IRS Commissioner Douglas Shulman, have been vocal critics of continuing the IRS program under which private companies are paid up to 24 percent of the money they collect.

President Colleen M. Kelley of the National Treasury Employees Union (NTEU), who has been leading the fight against the IRS privatization of tax collection, welcomed the Dorgan-Murray letter.

“The serious concerns expressed in their letter, ranging from improper or illegal collection practices to the waste of substantial taxpayer dollars, reflect the growing opposition to this program, both from members of Congress and from within the IRS itself,” President Kelley said.

The IRS’s National Taxpayer Advocate repeatedly has called for repeal of the program; in her most recent report to Congress, she described the program as failing in most major respects.

The Dorgan-Murray letter underscored those criticisms. “We believe if you look objectively at the program’s operations,” they wrote, “its costs far exceed any claimed benefits.” The program has resulted in a loss of $50 million to the Treasury in its first year of operation and isn’t expected to break even until at least fiscal 2010 at the earliest.

Moreover, Taxpayer Advocate Nina Olson warned in recent House testimony the program could result in as much as $500 million in foregone federal revenue over the next six years.

Senators Dorgan and Murray, who have pending legislation that would end the IRS’s use of private tax collectors (S. 335) noted the Olson estimate arguing there is “no justifiable reason to continue this wasteful government program when the IRS can bring in far greater amounts at far lower costs.”

“The IRS operates one of the most cost-efficient tax collection systems in the world, yet this administration insists on forging ahead with its costly privatization scheme despite dismal financial results,” President Kelley said.

In fact, the annual IRS Data Book, released last month, put the cost of collecting $100 by IRS employees in 2007 at a mere 40 cents—a drop of two cents from the 42 cents-per-$100 reported for the year before —further proof that the federal tax collection system is one of the most efficient in the United States.

The IRS itself has admitted that using private collectors is far more expensive than having the work done by agency employees. The IRS workforce would generate a return on investment of 13 to 1, significantly higher than the 4 to 1 return through the use of private companies.

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