A new compromise package in a Senate highway funding bill proposes to raise $2.4 billion by handing the job of tax collection over to private collection agencies. The bill would require the Treasury Department and Internal Revenue Service to contract with private collection agencies as one of several pay-for provisions of the highway bill.
The Senate bill cleared a key procedural hurdle this week and is expected to receive a vote soon. Senate Majority Leader Mitch McConnell, R-Ky., and Sen. Barbara Boxer, D-Calif., crafted the bill. They still have the option of moving to eliminate the private debt collection provision.
Congress
Kelley said the commission-based payment incentive led to abuse of the system and a disproportional focus on low-income taxpayers.The federal highway program has traditionally been funded by a tax on gasoline.
Sen. Chuck Grassley, R-Iowa, has been a longtime proponent of privatizing tax collection. This week he said it was hard to see the logic of NTEUs argument. Citing a recent
He said the IRS isn't even pursuing tax debts and reportedly regularly hangs up on callers because it can't handle the call volume. "The private contractors would take on accounts involving taxes that are due and owed that are just sitting dormant right now," he said.
The situation isn't likely to improve for the IRS. An appropriations bill approved by a Senate subcommittee Wednesday would cut spending at the agency in fiscal 2016 by $470 million compared to the current fiscal year. The House version of the bill goes even further, funding the agency at $838 million below the fiscal 2015 spending level.
Annual spending for the IRS has been slashed by $1.2 billion since 2010 and the agency is operating with 18,000 fewer employees. Call center staff alone has been cut by 26%.
Nina Olson, the National Taxpayer Advocate, confirmed the IRS answered just four in 10 calls to the agency in the latest tax season, a ratio she hadn't seen in her 40 years in tax issues.
The Treasury Inspector General for Tax Administration found in a 2013
President Obama, during an appearance Tuesday on The Daily Show with Jon Stewart, said the real scandal around the IRS is that they have been so poorly funded that they can't "go after these folks who are deliberately avoiding tax payments."