Oregon Considering Bill to Block Use of Private Collectors for State Debt

Oregon lawmakers Wednesday held a hearing on a bill that would prevent the state’s Department of Revenue from hiring private debt collection agencies to help recover unpaid taxes.

The bill’s (SB 1568) sponsor, Sen. Chris Edwards (D-Eugene), argues that it is necessary because private collection agencies can be “downright overly aggressive” in their collection practices.  The bill has prominent backing from the local office of the Service Employees International Union (SEIU) which argues that Department of Revenue employees can do a better job collecting tax debt.

That mirrors the main argument the National Treasury Employees Union used in their opposition to private agencies collecting IRS debt. Since the program died in 2009, reports have shown that the premature cancellation of the IRS private debt collection contract was misguided and served no purpose.

Jim Markee, with the Oregon Collectors Association, pointed out in the hearing that private firms must comply with federal and state fair debt collection practices law. He also noted that the state has dragged its feet on debt collection and that whatever it’s currently doing isn’t working.

According to the latest report compiled by the state, debtors owed the state of Oregon more than $3 billion as of July 2013, of which $738 million was unpaid taxes to the Department of Revenue.

Edwards conceded that the language of the bill is “overly simple” and that it probably wouldn’t pass. But he said he wanted to start a discussion about the way the state handles tax debt.