The IRS, Taxes, and Collection Agencies - Speak Up!

The legislation passing through Congress involving private collection agencies and overdue Federal income taxes is a travesty, not only for the accounts receivable management industry, but equally for honest U.S. taxpayers throughout the country.  This legislation has received far too little attention, and it behooves all of us to make our voices heard and keep these bills from becoming law.

To review: bills have been introduced in both the House and the Senate proposing to repeal the authority Congress had previously granted the IRS to include receivables management companies in the collection of overdue taxes.

S. 335, introduced to the Senate on January 18, directs the IRS to “immediately and indefinitely” suspend the use of receivables management companies.  Although the bill does not cancel the legal authority of the Internal Revenue Service to use private collection agencies, it makes no funds available for these collection efforts in 2007 and beyond.  Introduced to the Senate by Democratic Senator Byron Dorgan, the bill is now before the Senate Finance Committee. 

A companion bill, H.R. 695, was introduced on January 24 and goes further.  If this bill becomes law, the IRS would no longer have legal authority to contract the collection of overdue taxes to private collection agencies.  Introduced in the House by Democratic Congressmen Chris Van Hollen and Steve Rothman, the measure now has 54 co-sponsors and sits before the House Ways and Means Committee. 

On Capitol Hill, the new Democratic majority is clearly using this issue to help differentiate itself from Republican predecessors.  But this is not a partisan issue, and that Democrats would do well to consider other sides of this argument.  Here we look no further than the IRS.