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IRS Paid $20 Million to Collect $6.7 Million in Tax Debts

In case you don’t hate the Internal Revenue Service enough already, America’s tax collecting agency is giving you another reason.

The agency reportedly spent $20 million — of your tax money, by the way — to collect $6.7 million in tax debts.

“Private debt collectors cost the Internal Revenue Service $20 million in the last fiscal year, but brought in only $6.7 million in back taxes, the agency’s taxpayer advocate reported Wednesday. That was less than 1% of the amount assigned for collection,” The New York Times reported.

What’s more, private contractors in some cases were paid 25 percent commissions on collections that the I.R.S. made without their help, according to the annual report by Nina E. Olson, who heads the Taxpayer Advocate Service, an independent office within the I.R.S.

While Republicans have been the most vocal proponents of privatizing public services, congressional Democrats are equally responsible for the I.R.S.’s program. Despite the pointed failure of similar efforts in the past, Congress passed a law in 2015 requiring the I.R.S. to use outside contractors to make a dent in the $138 billion that taxpayers owe the government.

The outsourcing began last April. Since then, the report stated, “the I.R.S. has implemented the program in a manner that causes excessive financial harm to taxpayers and constitutes an end run around taxpayer rights protections.”

Some lawmakers say the federal government underfunds the IRS, which gets 95 million phone calls a year. The agency also complains about not having enough staff to handle the collection of taxes.

Those problems could be exacerbated by the new tax cuts passed by Congress and signed into law by President Trump.

“A preliminary estimate by the I.R.S. figured that the new law would require an additional $495 million over the next two fiscal years to handle tasks like updating programming, answering phone calls, drafting and publishing new forms, revising regulations and training employees on the new code,” the Times wrote.

During Barack Obama’s terms in office, the agency targeted conservative and tea party groups, denying or delaying for years their requests for tax-exempt status while doling the same status out to liberal groups. Last October, Attorney General Jeff Sessions said that groups with names involving “Tea Party” or “Patriots,” or groups that argued policy positions concerning government spending, were subject to “inappropriate criteria” to “screen” applications.

“The IRS’s use of these criteria as a basis for heightened scrutiny was wrong and should never have occurred. It is improper for the IRS to single out groups for different treatment based on their names or ideological positions,” he said.

Sessions announced that the department had made legal settlements with Tea Party groups whose tax-exempt status was significantly delayed by the IRS dating back to 2013, “based solely on their viewpoint or ideology.” The department’s settlement would pay the claims of each of the over 400 groups in the case.

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