U.S. Senate Bill Would Allow Private Collectors to Work for IRS Again

A bill introduced late last month in the U.S. Senate would direct the IRS to enter into contracts with private debt collection agencies to help recover “outstanding inactive tax receivables.” ACA International today brought attention to the bill with a strong show of support.

The bill — titled the Expiring Provisions Improvement, Reform, and Efficiency Act of 2014 or the EXPIRE Act of 2014 (S.2260) – is ostensibly intended to extend certain expiring credit in the U.S. tax code. Introduced on April 28 by Senator Ron Wyden (D-Ore.), the proposal has no cosponsors.

The vast majority of the bill deals with extending specific tax provisions slated to expire. Among those tax breaks include credits for teachers’ expenses, a deduction for mortgage insurance premiums, a new markets tax credit for businesses, and the 100% exclusion from gross income of gain from the sale of small business stock.

But in a section near the bottom of the text titled Revenue Provisions, Wyden’s bill directs the Treasury  Secretary to: (1) enter into qualified tax collection contracts to collect outstanding inactive tax receivables; and (2) establish a program to hire, train, and employ special compliance personnel to collect taxes using the automated collection system.

The text of the bill specifically authorizes the IRS to contract with a private third party to help collect “Inactive tax receivables,” which under the definitions means any receivable that is:

1. at any time after assessment, the IRS removes such receivable from the active inventory for lack of resources or inability to locate the taxpayer,
2. more than 1/3 of the period of the applicable statute of limitation has lapsed and such receivable has not been assigned for collection to any employee of the IRS, or
3. in the case of a receivable which has been assigned for collection, more than 365 days have passed without interaction with the taxpayer or a third party for purposes of furthering the collection of such receivable.

ACA International Thursday announced their support for the measure.

“We believe that a public/private partnership would be an efficient use of taxpayer resources to recover rightfully owed debts for the United States government,” said ACA CEO Pat Morris.

The IRS previously contracted with private debt collection agencies to recover back taxes. But that program was scuttled in early 2009 under pressure from consumer interest groups. There have been recent calls to revive the program.