The IRS has ended a controversial program that allowed private debt collectors to pursue individual debts owed to the government. The private debt collectors, described as “bounty hunters who collect taxes from vulnerable people for profit,” were allowed to keep 25% of any collected debts for themselves. Before we celebrate, let’s all take a moment to join Senator Charles Grassley of Iowa in thinking about those poor private debt collectors who no longer have jobs harassing and abusing people…
Sen. Charles Grassley of Iowa, the top Republican on the Senate Finance Committee, blasted the decision to end the program, saying the IRS was caving in to “union-driven political pressure.”
“The administration has decided that after spending nearly a trillion dollars in the stimulus bill to keep people working across the country, they are going to cut a program that provides jobs to hundreds of people during the middle of a recession, including 60 in Iowa,” Grassley said in a statement.
Under the privatized program, the IRS turns over delinquency cases, often in the $5,000 to $10,000 range, that the IRS lacks the manpower to pursue.
The program costs about $7.6 million a year to administer, and private contractors are allowed to keep about a quarter of the taxes they collect.
The contracts the private agencies were working under expire Friday. The IRS has been reviewing the program for the past month to determine whether to extend the agreements.
Private debt collectors are notoriously ruthless, and cutting them loose is a big win for taxpayers. The federal government plans to replace the private debt collectors with 1,000 new federal tax collectors.
IRS to drop private debt collection program [AP]
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