Introduction of the Taxpayer Abuse and Harassment Prevention Act: Congress Should Not Allow Bounty Hunters to Abuse Taxpayers

INTRODUCTION OF THE TAXPAYER ABUSE AND HARASSMENT PREVENTION ACT: CONGRESS SHOULD NOT ALLOW BOUNTY HUNTERS TO ABUSE TAXPAYERS

* Mr. VAN HOLLEN. Madam Speaker, last week I introduced H.R. 695, the Taxpayer Abuse and Harassment Prevention Act of 2007, along with Representatives STEVE ROTHMAN, RUSS CARNAHAN and 42 other original cosponsors. If enacted into law, this legislation would repeal the provision tacked onto the 2004 corporate tax bill (H.R. 4520, the so-called American Jobs Creation Act in the 108th Congress) that hands over the tax returns of millions of American taxpayers to private contractors to collect delinquent taxes, and allows them to keep 25 percent of their take as a commission for services rendered.

* Three weeks ago, on January 9th, in her annual report to Congress the National Taxpayer Advocate identified the IRS' private debt collection initiative as one of the most serious problems facing taxpayers and called on Congress to repeal the IRS's authority to use private collection agencies to collect federal taxes. The Advocate's report illustrated why the IRS private tax collection program is a waste of taxpayer dollars, invites overly aggressive collection techniques and jeopardizes the financial privacy of American taxpayers:

* The IRS's Private Debt Collection initiative is not cost efficient, adds unnecessary costs and burdens to taxpayers, diminishes the improved image of the IRS, and surrenders too many valuable components of our tax administration system. Therefore, Congress should repeal IRC §6306 and thereby terminate the Private Debt Collection initiative.

* We must repeal this provision because it opens the door to taxpayer intimidation and abuse, practices that have been outlawed by Congress. This practice amounts to bounty-hunting--at taxpayer expense--by allowing collection agencies to harass those same American taxpayers, many of whom are guilty of nothing, with the incentive of collecting their commission as their primary motivation. Giving unaccountable outside bounty hunters unfettered access to Americans' personal financial data poses a risk that we just cannot afford.

* What's more worrisome is the IRS' inability to oversee the work of these private debt collectors. A 1996 pilot program for private collection was so unsuccessful that a similar pilot program planned for 1997 was cancelled outright. The contractors used in the pilot programs regularly broke the Fair Debt Collection Practices Act, did not protect the security of personal taxpayer information, and even then failed to bring in a net increase in revenue. An audit report of the pilot program found that, ``contractors blatantly circumvented IRS policies and procedures even when security personnel identified inappropriate practices.' In fact, the report found that contractors made hundreds of calls to taxpayers during times prohibited by the FDCPA, and that calls were even placed as early as 4:19 a.m.

* While IRS employees are explicitly forbidden from being evaluated on the basis of revenue collected, the private collection scheme would actually link contractor pay to the amount of revenue collection. This policy encourages contractors to use aggressive collection techniques to boost their remuneration. Furthermore, the IRS is currently liable for damages to a taxpayer resulting from the misuse of confidential information by an IRS employee, but taxpayers will not be able to recover damages from the federal government where contractors are guilty of malfeasance.

* The House had already expressed its will that this provision not become law when it approved by voice vote an amendment to the FY2005 Treasury Appropriations bill that prevented the expenditure of any federal funds for private collection of federal taxes. Unfortunately, the Treasury Appropriations bill never became law, and the House language was stripped out of the FY 2005 omnibus spending bill by the Republican leadership in the conference--behind closed doors, in the dead of night.

* We must repeal this onerous provision. We must protect American taxpayers from intimidation and abuse. We must ensure that personal financial records are protected and remain private. Two decades ago this Congress passed the Fair Debt Collection Practices Act specifically to protect Americans from intimidation and abuse, but last year this Congress perpetrated an injustice by allowing these very abuses to go forward.

* I urge my colleagues to join me in working with the IRS to find a more effective means of collecting delinquent tax debt collection and avoid this risky scheme altogether. Let's pass the Taxpayer Abuse and Harassment Prevention Act.

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