December 9, 2015 by Lisa Brammer
Following approval by first the U.S. House of Representatives then the Senate, President Obama signed the Fixing America’s Surface Transportation (FAST) Act into law last Friday.
The FAST Act is primarily a law that provides funding for improving our nation’s surface transportation infrastructure, including roads, bridges, transit systems, and rail transportation networks. The law is fairly comprehensive, it also provides extra funding for things like bicycle lanes, bike parking, as well as walking trails.
I’m sure by now you are thinking, this is all well and good, but what does this new legislation have to do with debt collection? The Fast Act also contains a provision that requires the IRS to use private debt collection agencies to help recover unpaid tax debt.
The IRS has had the ability to partner with collection agencies—and has in the past—but then chose not to. This new law will now require them to use private debt collection companies to collect “inactive tax receivables,” which is tax money owed that remains uncollected due, in part, to a lack of time and/or resources. I read in The Hill that the amount uncollected has increased 23 percent since 2009 and currently amounts to $380 billion worth of tax debt!
Hello! This seems like a no-brainer to me. Why leave 380 billion tax dollars on the table when private collection agencies are more than willing and able to collect money on the government’s behalf. Shouldn’t collecting from those who owe, but choose not to pay be preferable to raising taxes on the rest of us who actually do pay?
The last time the IRS partnered with private collection agencies was in 2006. I read that when the IRS’s Private Debt Collection (PDC) program launched in 2007, it collected $98 million in gross tax payments in just over two years. That’s an additional $98 million recovered that would have otherwise been left uncollected.
Unfortunately, the program was abruptly discontinued before it could recoup its start-up costs and was deemed a financial failure. However, I read in the ACA International that a 2010 report by the Government Accountability Office (GAO) revealed that the design and methodology used by the IRS to evaluate the program was flawed and ineffective.
I know those against the PDC program like to harp about abusive tactics they fear collection agencies employ. That couldn’t be further from the truth. When the program was operational the IRS hired an independent outside firm to evaluate customer service. Results showed that private collection agencies had customer satisfaction ratings of 96 percent and private collection agency employees scored much higher than IRS collection employees with tallies consistently over 99 percent in areas of Regulatory, Procedural, Customer Accuracy, and Timeliness and Professionalism.
The thing is, private collection agencies do an excellent job of putting revenue back into the U.S economy—to the tune of $55.2 billion annually. It’s about time, the IRS should take advantage of this industry’s expertise again.
Founded in 1950, United Credit Service, Inc. is a full service, licensed revenue cycle management and debt collection agency in Wisconsin providing effective, customized one on one management and recovery solutions for our business partners. Visit our website at http://www.unitedcreditservice.com, call 877-723-2902 or check out our YouTube video.