The Internal Revenue Service is about to start using four private debt-collection companies to chase down overdue payments from hundreds of thousands of people who owe money to the federal government, a job it has handled in house for years.
Unlike IRS agents, who are not usually allowed to call delinquent taxpayers by telephone, the outside debt-collection agencies will have free rein to do so. Consumer watchdogs are fearful that some of the nation's most vulnerable taxpayers will be harassed and that criminals will take advantage of the system by phoning people and impersonating IRS collectors.
Additionally, one of the four companies that the IRS has hired, Pioneer Credit Recovery, a subsidiary of Navient, was effectively fired two years ago by the Education Department from its contract to collect delinquent debt for misleading borrowers about their loans at what the department called "unacceptably high rates."
The congressional Joint Committee on Taxation estimated that the new debt-collection program had the potential to gain a net $2.4 billion over the next 10 years.
"Collecting tax debt that's due and not in dispute is a matter of fairness to the many taxpayers who pay what they owe," said Sen. Charles E. Grassley, R-Iowa. "It's been clear for a long time that the IRS isn't collecting the debt that these contractors will focus on."
Twice before, in 1996 and 2006, the IRS has tried to farm out some of its collection duties. Both times, the programs were shut down and deemed failures. The most recent attempt generated thousands of complaints, including one story about an older couple who received more than 150 phone calls in less than a month.
Even so, Congress passed a law in 2015 ordering the IRS to once again outsource some of its delinquent debt. The provision was buried in a $305 billion highway funding bill. The agency hired four companies and started giving them cases this month.
John A. Koskinen, the commissioner of the IRS, said the new program took a "streamlined" approach, with significantly lower overhead than the last attempt.