News
accounts continue to mention plans to increase IRS enforcement funding and to
impose onerous reporting requirements on sensitive banking information to the
IRS.
These
proposals raise many concerns, particularly in light of questions regarding the
ability of the IRS to protect taxpayer information.
However,
I want to discuss an existing IRS program that’s already collecting hundreds of
millions of dollars in unpaid taxes annually.
I am
referring to the Private Debt Collection Program that uses private contractors
to pursue tax debts that the IRS would otherwise not pursue.
This
program was enacted as part of infrastructure legislation signed into law in
2015. Each year since then annual updates on the program’s finances document
the growing success of the program.
As
of the end of fiscal year 2020, the program had collected nearly $1 billion in
unpaid taxes. After accounting for program costs, it’s returned more than $678
million in net revenue to the Treasury. Of that $678 million, more than $458
million was from fiscal year 2020 alone.
Every
year the program is allowed to function, it brings in more and more money to
the Treasury. At the same time, it generates resources the IRS uses to hire
additional tax collection personnel. To date, the program has enabled IRS to
hire many new employees.
The
recent IRS update for the third quarter of fiscal year 2021 continues this
trend. Through June, the Private Debt Collection Program has provided more than
$700 million in net revenue to the Treasury.
In
other words, in the first 9 months of fiscal year 2021, the program has more
than doubled the revenue it has returned to the Treasury. The longer this
program is allowed to work, the more successful it becomes.
The
proposals being put forward by my colleagues across the aisle are based on the
premise that by spending more money the IRS will collect more money. The
Private Debt Collection program brings in money without spending more money.
Despite
the obvious benefits of this program, I’m very concerned that the IRS has suspended
providing additional cases to the program until the end September.
Commissioner
Rettig assured me in responses to written questions that additional cases would
be provided on September 27.
I am
going to hold him to that, and in the upcoming days expect to see him keep his
word to me.
All
the handwringing over spending more money to increase IRS enforcement and
information reporting shows the serious issues involved in those proposals.
The
IRS Private Debt Collection Program is proven to collect taxes already owed,
allows the IRS to hire more personnel and costs nothing up front.
Anyone
serious about closing the tax gap should support and encourage the full use of
this program.
