Tax Collection Responsibility Act of 2007

TAX COLLECTION RESPONSIBILITY ACT OF 2007 -- (House of Representatives - October 10, 2007)

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Mr. HOYER. Mr. Speaker, I thank my friend for yielding.

First, let me respond to a point Mr. Brady has made a number of times. The point I am referring to is if we did not spend any money on private collection, we would not collect $1 billion. We can accept that as accurate. But the assumption is that we wouldn't spend any money in the public sector to collect that money. But I will read figures that say if we did that, we would geometrically collect more than a billion dollars by a factor of two or three or four or five. I will read that figure, Mr. Brady. But you keep reading the figure, the assumption of which is we are simply going to drop collection. We are not going to drop collection.

Today, through this important legislation, the Tax Collection Responsibility Act, this House will reiterate that the collection of taxes is a core governmental function that should not be contracted out to private companies.

But no one, no one should be mistaken. Our objection to the private collection of taxes is not simply philosophical; it is practical, as well.

First, there simply is no evidence that private tax collectors are more efficient. In fact, the opposite is true.

IRS Commissioners of both parties repeatedly have testified before Congress that IRS employees could do this work more efficiently. In fact, according to the IRS, the return on investment for IRS employees doing work similar to private collection agencies is 13:1. The private collection agency return is about 4:1, or approximately one-third as effective in the private sector as it is in the public sector. That is what the IRS Commissioners say.

Secondly, with Americans legitimately concerned about the privacy of their personal information and identity theft, I don't believe, and I hope this House does not believe, that it is good policy to turn over Social Security identification numbers and tax information to private collection companies.

Third, the National Taxpayer Advocate has raised concerns about the tactics used by private collection agencies, including intimidation and harassment. The fact is that private tax collectors are keeping 21 to 24 percent of what they collect, and are allowed to keep up to 25 percent under the law. Thus, with the compensation of private collection agencies directly tied to what they collect, they are incentivized to use aggressive tactics. Ironically, however, and let me go back to that figure, they are less effective in collecting, 13-to-1 versus 4-to-1, than the public sector.

Finally, let me say too many of my Republican friends want it both ways. On the one hand, Republican-controlled Congresses have cut the IRS workforce by 20,000 people since 1995. In fact, just this year they offered an amendment to the Financial Services Appropriations bill that would cut IRS funding by 8.9 percent; yet they come to the floor and say we are not aggressively collecting sufficient funds so we have to privatize it, contract it out. That expense, of course, is an additional expense, which, by the way, escalates more rapidly than does the public sector expense.

As I said, they complain that we must allow the government to hire private collection agencies because the IRS does not have the resources to recover all income tax that is owed. So

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on the one hand, cut their resources, and then come to the floor and say they don't have sufficient resources to do the job so we will contract it out, which will require, of course, contract resources while eliminating salary resources.

I think we all know the most effective solution: We need to provide the IRS with the resources it needs to ensure that all taxpayers pay their fair share under the law, so that no taxpayer has to pay more than their fair share or have rates greater than they need to be, which would be the case if everybody paid their fair share.

Mr. Speaker, this legislation is an important step in that effort. I urge all of my colleagues, Mr. Speaker, to vote for this important bill.

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