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Washington, D.C – New evidence that for-profit collection agents are aggressively pressuring taxpayers with reckless advice for settling their federal tax debts is confirmation that some government services should not be outsourced to private companies, said National Treasury Employees Union National President Tony Reardon.

Four U.S. Senators, in a Friday letter reported by the New York Times, accuse one of the for-profit companies under contract with the Internal Revenue Service of breaking the rules for how to treat taxpayers. Call scripts show the company is hounding taxpayers to raid their retirement fund or take out a second mortgage in order to clear their tax debt.

This should come as no surprise to anyone who has been following the failed history of outsourcing debt collection work to contractors who work on commission. The program has twice been abandoned because of high costs to taxpayers and abusive tactics on the part of the private companies. Nonetheless, Congress insisted on a third try, starting in April.

NTEU and consumer watchdogs warned the privatization would lead to more fraud, wasted money and aggressive tactics. Additionally, Nina Olson, head of the Office of the Taxpayer Advocate, and J. Russell George, Treasury Inspector General for Tax Administration, both have expressed consumer concerns over the potential for impersonation scams. 

“This program is only a few weeks old, and already there is proof that one of the companies hired by the IRS is breaking the rules and treating taxpayers atrociously,” Reardon said. “This company has a poor record and previously lost its contract with the U.S. Department of Education, a fact that the Treasury Secretary recently testified that he was not aware of when the company was hired by the IRS.”

Instead, NTEU has urged Congress and the IRS to leave the collection work to the public servants of the IRS.

“These professional federal employees have a variety of legal tools available to assist taxpayers that don’t involve threatening them or forcing them into unwise financial decisions,” Reardon said.

IRS employees have the ability to postpone, extend or suspend collection activities for limited periods of time; make available flexible payment schedules; waive late penalties or postpone asset seizures; and negotiate Offers In Compromise, an agreement between a struggling taxpayer and the agency that settles a tax debt for less than the full amount owed.

NTEU will continue to raise concerns that using private collection agents opens the door for more scams by criminals who impersonate IRS agents and steal from innocent taxpayers.

The union has endorsed legislation from Rep. John Lewis, (D-Ga.) that would bar the use of private collection agents by the IRS.

NTEU represents 150,000 employees at 31 federal agencies and departments.