WASHINGTON—U.S. Rep. Bill Pascrell, Jr. (D-NJ-08) a member of the House Committee on Ways and Means and a staunch opponent of the Internal Revenue Service’s use of private debt collection agencies, today applauded Treasury Secretary Timothy Geithner’s decision to end the practice.
“Private debt collection agencies have failed to work in an adequate or cost efficient manner and do not deserve a contract extension,” stated Pascrell. “By terminating these contracts, the Obama administration is reigning in wasteful spending on ineffective government contracts. Debt collection is an inherent government function that I am pleased to see returned to federal employees.”
Pascrell emphatically expressed his desire to end the use of private debt collectors during numerous congressional hearings, in letters to the IRS and most recently during a meeting with IRS Commissioner Douglas Shulman.
In announcing this decision, Commissioner Shulman noted the IRS anticipates hiring more than 1,000 additional collection personnel this fiscal year. He also noted that IRS employees have a range of options available to them in attempting to resolve collection cases that, by law, the private companies contracted by the IRS did not have.
Attached below is a letter that Pascrell and members of the House Committee on Ways and Means sent to then President-elect Obama on December 16, 2008:
December 16, 2008
President-Elect Barack Obama
The Office of the 2008 Presidential Transition
Washington, D.C. 20270
Dear President-Elect Obama:
Congratulations on your recent victory. We are writing concerning the Internal Revenue Service’s (“IRS”) use of private collection agencies to collect unpaid Federal tax liabilities. Presently, the IRS has contracts with two companies for the collection of unpaid Federal income taxes. We understand that the IRS is in the process of determining whether to exercise its option to extend these contracts for a one-year period, which would run from March 8, 2009, to March 7, 2010.
In the 110th Congress, the House passed three bills that would repeal the authority of the IRS to use private collection agencies. The collection of Federal taxes is an inherent government function. Former IRS officials have testified that the IRS can collect Federal taxes cheaper and more efficiently than the private collection agencies.
We respectfully request that your Administration not proceed with renewing the existing contracts or expanding the program. In light of the current economic situation, it is important that the Administration protect taxpayers by ensuring that they deal with the IRS directly to work through any difficulties.
Thank you for your attention to this matter. We look forward to working with you and your Administration during the upcoming Congress.
Charles B. Rangel John Lewis
Pete Stark Sander M. Levin
Jim McDermott Richard E. Neal
Earl Pomeroy Earl Blumenauer
Shelley Berkley Joseph Crowley
Chris Van Hollen Kendrick Meek
Allyson Y. Schwartz Bill Pascrell
cc: Peter R. Orszag
Director-designee, Office of Management and Budget
Timothy F. Geithner
Secretary-designee, Department of Treasury
Douglas R. Shulman
Commissioner, Internal Revenue Service