Tuesday, April 15, 2008

Collectors Cost IRS More Than They Raise

I'm not sure there's a funnier story to celebrate today, April 15th, national Tax Filing Day:

The Internal Revenue Service expects to lose more than $37 million by using private debt collectors to pursue tax scofflaws through a program that has outraged consumers and led to charges on Capitol Hill that the agency is wasting money for work that IRS agents could do more effectively.

Since 2006, the agency has used three companies to go after a $1 billion slice of the nation's unpaid taxes. Despite aggressive collection tactics, the companies have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program. The debt collectors have pocketed commissions of up to 24 percent.
Privatizing tax collections is not only a bad idea, but it continues the long-running tradition of transferring wealth from the public coffers to the private sector under the guise of "saving money."

And in this case, the money isn't even making it into the public coffers first before being pinched by these tax collection agencies.

Happy April 15th.

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