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Washington, D.C.—Approval by the House Ways and Means Committee of legislation that includes a provision to end the government’s use of private tax collectors marks the third time this committee has signaled its strong opposition to continuing the Internal Revenue Service (IRS) program.

“Today’s vote reflects this committee’s determination to end the IRS private tax collection program that has proven to be a fiscal failure,” said Colleen M. Kelley, president of the National Treasury Employees Union (NTEU).

The bill approved today was introduced by Rep. Charles Rangel (D-N.Y.), who chairs the committee and has been a vocal critic of the IRS use of private tax collectors, which receive a bounty of up to 24 percent for collecting tax debt. The language to end this privatization effort is modeled on a measure (H.R. 695) authored by Ways and Means Committee member Rep. Chris Van Hollen (D-Md.), an early and strong critic of the use of private tax collectors.

The agency recently extended the contracts of the two companies involved in the program despite a net loss of $50 million in its first year of operation. While the IRS initially projected the effort would fully absorb its start-up costs by this year, the program is now not expected to reach the break-even point until fiscal 2010 at the earliest.

Previously the House approved two separate bills, H.R. 3996 and H.R. 3056, both of which originated in the Ways and Means Committee and both of which—like the bill approved today—would repeal the IRS authority to use private collection agencies to collect tax debt.

“To continue this program is to continue a significant loss of revenue to the U.S. Treasury and America’s taxpayers,” said President Kelley.

The loss to the federal government in foregone revenue could be as high as $500 million over the next six years, according to the IRS Taxpayer Advocate Nina Olson, who has repeatedly called for an end to the use of private tax collectors.

Last May, a Ways and Means Committee hearing underscored NTEU’s early warnings of likely abusive collection tactics by the private companies. The hearing identified numerous taxpayer complaints and highlighted the problem by reviewing a case in which an elderly couple received some 150 calls from a collection company under contract to the IRS despite being told that the taxpayer it was seeking no longer lived at that address.

The latest legislation comes on the heels of a letter from Sens. Byron Dorgan (D-N.D.) and Patty Murray (D-Wash.) to new IRS Commissioner Douglas Shulman seeking a prompt review of the program with an eye toward ending it. Both senators have sharply criticized the use of private collectors.

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