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Washington D.C. — In the midst of the wide-ranging, serious problems infecting the Internal Revenue Service (IRS) use of private debt collectors, one fact is being overlooked—that IRS employees, unlike debt collectors, are trained to assist taxpayers in becoming compliant with the nation’s tax laws, the head of the union representing IRS employees told a key House committee today.

“IRS employees have access to the information, as well as the enforcement tools, both carrots and sticks, to do that,” President Colleen M. Kelley of the National Treasury Employees Union (NTEU) told the House Ways and Means Committee today.

In contrast, she said, “private collectors’ interest is to collect from a taxpayer the balance due amount they have been provided. They have no interest in whether the taxpayer owes other taxes or may not have filed required returns. Nor do they have access to other taxpayer records, so they are unable to answer any questions, provide any advice, or use any enforcement tools, such as extensions, offers-in-compromise or liens or levies.”

Their only goal, the NTEU leader said, is to collect the money, and their only tool is the telephone. “As we will hear today,” she added, “the telephone was used as an instrument of abuse against third parties who owed no taxes.”

The Ways and Means Committee hearing was the culmination of a committee investigation, led by its chairman, Rep. Charles Rangel (D-N.Y.), into the much-criticized use by the IRS of private

sector debt collectors, including a review of taxpayer complaints filed against the private companies thus far.

President Kelley, who has been leading the fight against the administration’s tax privatization plan, repeated her criticisms of the program—that it is a waste of taxpayer dollars, that it invites overly aggressive collective techniques, that it jeopardized the financial privacy of American taxpayers, and that it may ultimately “serve to undermine IRS enforcement and compliance efforts.

She noted, as well, that allowing private collection agencies to pursue tax debts in exchange for a bounty of up to 24 percent of the money they collect “flies in the face” of the IRS Restructuring and Reform Act of 1998 “which specifically prevents employees or supervisors at the IRS from being evaluated on the amount of collections they bring in.”

The NTEU president said that while the IRS has both the authority and expertise to improve taxpayer compliance, it simply doesn’t have the staff—pointing to an overall 36 percent decline in combined collections and examination function enforcement staff between 1996 and 2003.

“While not proposing, or fighting for, adequate resources, the IRS has at the same time cited a lack of manpower as the justification for outsourcing cases to private collection companies,” she said. “It makes no sense to allow private collection companies to keep a quarter of what they collect on the easiest cases, when IRS employees could be doing it at less cost,” Kelley added, noting NTEU’s continuing recommendation for a two percent annual increase in staffing, amounting to about 1,800 positions a year, over a five-year period “to gradually rebuild the depleted IRS workforce.”

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