Rangel to IRS: No New Private Debt Collection Contracts

Mar 23, 2007
Press Release

WASHINGTON, D.C. – Due to numerous taxpayer complaints, Ways and Means Committee Chairman Charles B. Rangel has urged the Internal Revenue Service (IRS) not to award any new private tax collection contracts this year.  Chairman Rangel made this request in a letter to IRS Commissioner Mark Everson, in which he also announced a Ways and Means Committee investigation into the overall use of private companies to collect federal income tax debts.  

“We have heard too many complaints and concerns about the tactics used by private debt collectors to allow the IRS to issue new contracts,” said Chairman Rangel.  “We need to investigate these violations to ensure that we are protecting the privacy and dignity of taxpayers, not enabling harassment by these private companies.”

The IRS was granted authority to institute a private collection program in 2004 under Internal Revenue Code section 6306.  The IRS had three collection firms under contract from September 2006 to March 2007, however, only two of those contracts have been extended and the cases pending before the third contractor have been recalled.  Commissioner Everson has previously testified before Congress that the use of private collection companies is more costly than using trained IRS professionals.

A copy of Chairman Rangel’s letter is attached.