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Washington, D.C.—The Internal Revenue Service (IRS) doesn’t need to outsource tax-collection work to unaccountable private companies when it can retrain thousands of its own employees who are scheduled to be laid off soon for those positions, the head of the National Treasury Employees Union (NTEU) said today. The IRS announced today that it has contracted with four private collection agencies to collect unpaid tax debt.

NTEU National President Tony Reardon said Congress should tell the IRS to retrain the more than 7,000 employees who are slated to lose their jobs at sites that process paper tax returns in Covington, Kentucky/Cincinnati; Fresno, California; and Austin, Texas in 2019, 2021 and 2024 respectively. The IRS announced on Sept. 14 that approximately 1,800 employees in Covington, 3,000 in Fresno and 2,400 in Austin would have their jobs phased out.

Many of these workers have been loyal employees of the IRS for decades but only some of them will get other jobs within the agency. The smart and humane thing to do would be to retrain the remaining workers to collect delinquent taxes rather than outsourcing IRS jobs,” President Reardon said. “There’s absolutely no need for Congress to outsource this important work to the most complained about industry in America when there’s more than enough in-house talent available.”

A highway bill that Congress passed late last year includes a provision requiring the IRS to outsource tax collection to private collection agencies (PCAs). Two previous attempts in the past 20 years ended in failure and wasted millions of taxpayer dollars.

The PCA experiment is being revived as the number of tax-related telephone scams surge to record levels.

“NTEU will push Congress to give the IRS the resources it needs to retrain thousands of employees who are ready and willing to stay on and help the agency fulfill its public-service mission,” the NTEU leader said.

IRS employees can assist taxpayers who owe back taxes in becoming compliant. Reardon told Congress last year that IRS employees have the legal authority to do things PCAs can’t, such as postponing or suspending debt collection for some time, setting up flexible payment arrangements and waiving late-payment penalties.

Transferring this work to the Submission Processing sites will also aid the communities of Covington, Fresno and Austin still reeling from the recent announcement that thousands of jobs will disappear.

Before terminating the PCA program in 2009, an independently-reviewed study by the IRS found that IRS employees are three times more efficient at collecting taxes than private tax collectors.

National Taxpayer Advocate Nina Olson has told Congress that nearly 80 percent of the cases PCAs handle will involve low-income taxpayers who lack the resources to settle their tax debts. Civil-rights groups such as the NAACP and the National Council of La Raza and consumer-advocacy organizations including the National Consumer Law Center also oppose the use of PCAs to collect outstanding tax debts.

The first attempt to use PCAs to collect federal taxes came in 1996 and 1997, when Congress authorized IRS to conduct a two-year pilot project. The 1996 pilot was so unsuccessful it was cancelled after 12 months. Contractors participating in the pilot programs were found to have regularly violated the Fair Debt Collection Practices Act, and the program resulted in a $17 million net loss.

IRS contracted with PCAs again in 2006. Three PCAs who secured the contract were permitted to keep between 21-24 percent of the money they collected. While the program was projected to bring in $2.2 billion in new revenue, IRS data showed that the three-year program resulted in a net loss of almost $4.5 million to federal taxpayers after subtracting $86.2 million in program administration costs and more than $16 million in commissions the PCAs pocketed.

NTEU, the nation’s largest independent federal-employee union, represents 150,000 employees in 31 agencies and departments.