Omnibus Appropriations Act, 2009

Floor Speech

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Mr. GRASSLEY. I am not going to take long to respond because I think the main point I make is this. My remarks were not addressed by the Senator from Illinois. The issue we are talking about is an IRS policy that they will not go after any amount of money under $25,000, even though those are amounts that individuals agreed they owe.

So any comparisons of what the IRS can do versus what private debt collection agencies can do is not legitimate because you can hire more IRS employees. But I told you the policy of the IRS if they hire more employees, they will not go after amounts of $25,000 or less and I think it is fair to taxpayers that are honest, that every dollar owed is collected. Not one dollar more. And that we shouldn't have a government policy that is not going to go after it, and this program does go after it.

He mentioned start-up costs and this is very important because you cannot judge the cost effectiveness of a program based on how much was spent on start-up costs. There are start-up costs in any Federal agency, for any new agency or program that starts out. You can't weigh the costs incurred for what was supposed to be a permanent program against the benefits of a program that hasn't been fully operational for most of the 2 years of its existence.

And the reason it hasn't been fully operational, is that the union, the taxpayer advocate, and even the chief counsel, continued to throw up roadblocks by weighing in on what type of cases the contractors could work. This means that even though the program was supposed to start in September 2006, it was months later before the contractors received the full allocation of cases they were supposed to get.

The Senator from Illinois asked what happened in regards to why the actual amounts collected to date by contractors was lower than expected. Well, that is what happened. And to his point about paying $13 million for $60 million of revenues. Let's be honest--the contractors are paid on a commission basis so the IRS isn't paying anything out of its pockets. The contractors are getting a percentage of the taxes they collect and they don't get paid for all the work they do that generates no collection. Because of the IRS policy to not collect taxes due under $25,000, the $60 million IRS did get is revenue that IRS would never have received.

He also mentioned this, there is a difference between what is paid to education debt collection contractors and what is paid to tax debt collection contractors. He is right. But there is a factor with collecting taxes that is not true in the case of the Education Department and that is the privacy issues that have been brought up. The contractors with the IRS incur higher expenses than education contractors because they don't have access to all the information IRS has because the law does protect the privacy of taxpayers. And because they have to provide all of the safeguards and protections that IRS provides, the contractors have to incur more security expenses than education contractors.

The Senator from Illinois mentioned the success of IRS's use of automated collection systems. You have to remember that there is nothing automated about the IRS's so-called automatic collection system. The contractors use automated systems to determine which taxpayer to call next. The IRS doesn't even make outbound phone calls--the only phone calls are returning phone calls when taxpayers call the IRS with questions about a letter they received.

Finally, the Senator from Illinois described my efforts to continue to fund the IRS program as my own personal stimulus plan because it will save jobs in Iowa. I want to make clear that it was expected that the IRS would contract with 10 or 15 contractors--not just 2. But because of all the roadblocks put up by the union and others, the IRS apparently claims that there aren't enough cases to provide to even these two contractors. This doesn't make sense to me since there is apparently $25 billion of potentially collectible debt that the IRS is not pursuing. The program, if run properly, would have and should have been expanded to include other contractors. And I would also like to point out that these two contractors are national organizations and between them are likely to have offices and employees in almost all of the 50 States.

So the bottom line of our approach in this program is to make sure that the honest taxpayer is protected. And that we do not support an IRS policy that we aren't going to collect the money from everyone--a policy which is not clear to me that IRS is going to change. And we're showing that we do not accept this policy through this program. We are going after that money that no IRS employee is going to go after. And if you're going to be fair to the taxpayer that pays every dollar that they owe, it seems to me we should make every effort we can to go after all taxpayers who do not pay their taxes. I yield the floor.

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