Washington, DC---Today, U.S. Senator Edward M. Kennedy called on IRS Commissioner Mark Everson to suspend the agency’s plan to launch a new initiative to hire private debt collection companies to collect taxes. IRS plans to begin implementing the initiative tomorrow.

Senator Kennedy said, “This is the wrong approach to take to collect taxes. It will be more costly, and it raises serious privacy and identity theft concerns. Americans would be better served if the IRS sets aside this initiative and works with Congress to ensure that the agency has the resources it needs to collect unpaid taxes.”

The House of Representatives recently approved legislation to block the plan. However, the legislation has not yet moved through the Senate. Senator Kennedy’s letter calls on the IRS to suspend the program because “it would be prudent… to withhold action until Congress has completed work” on the legislation.

Below is the text of the letter:

Dear Commissioner Everson:

I’m writing to respectfully request that the IRS suspend its private tax collection initiative. I oppose the agency’s initiative, and I urge you to reconsider it.

The House of Representatives recently voted to include a spending limitation provision in its version of the Fiscal Year 2007 Treasury Appropriations Bill. The House-passed provision would prohibit the IRS from spending funds to pursue the private tax collection initiative in the coming fiscal year. The Senate committee-passed version does not include such a provision, but the full Senate has not yet had the opportunity to act on the bill.

The IRS has the authority under current law to implement its private tax collection initiative, but the House provision should give the agency pause. The version of the fiscal year 2007 Treasury Appropriations bill that becomes law may well provide the IRS with additional guidance on this issue. Therefore, it would be prudent for the IRS to withhold action until Congress has completed work on the Treasury bill rather than launch it as scheduled tomorrow.

There are flaws in the initiative that could be avoided by hiring additional IRS personnel rather than contracting with private tax collection companies. For example, you have testified before Congress that adding IRS collection personnel would be a less expensive means of debt collection than using private agencies, which may earn nearly a quarter of the amount collected.

Serious privacy concerns have also been raised about handing over Americans’ personal tax-related information to private companies, particularly when identity theft is a growing problem. The IRS reported in June that it lost track of a computer containing personal information about hundreds of its employees and job applicants. The case was just one of a dozen such cases in recent months in which federal agencies allowed such information to be compromised. The Administration has ordered federal agencies to take measures to protect Americans’ personal information, but the IRS plan to turn over such information to private collection agencies may not result in the necessary level of security.

For these reasons, I urge you to delay the proposed initiative and work us in Congress to ensure that the IRS receives the resources it needs to fulfill its tax collection obligations

 

With respect and appreciation, and I thank you for considering this request.

Sincerely,

Edward M. Kennedy