[StBernard] Rep. Melancon Votes to Protect Taxpayers, Reduce Government Waste

[Westley Annis]

WASHINGTON, D.C. – U.S. Rep. Charlie Melancon (D –LA) voted today in support of legislation to reduce government waste and increase accountability at the Internal Revenue Service.  The bipartisan Tax Collection Responsibility Act of 2007 (H.R. 3056) would repeal the IRS’s authority to contract out tax collection work to private collection companies. Under the current program, the IRS is turning over confidential taxpayer information, including social security numbers, to private collection companies who are allowed to keep up to 24 percent of whatever they collect as a commission.

 

“As a fiscal conservative, I support efforts to eliminate government waste and strengthen accountability for taxpayer dollars,” said Rep. Melancon.  “The current private debt collection program exposes taxpayers to harassment and wastes tax dollars by paying a bounty up to 24 percent to the debt collectors.  This bill we passed today protects taxpayers from having their confidential tax information shared with outside companies and puts the responsibility for tax collection solely where it belongs: with the IRS.”

 

In testimony before Congress, IRS officials have repeatedly acknowledged that using private collectors to collect federal taxes is more expensive than having IRS do the work itself.  Former IRS Commissioner Mark Everson testified at a Congressional hearing in April 2006 that “..... we could do this work as cheaply or more cheaply than the private sector.  As you know, we do the President's Competitive Sourcing Initiative and we look at different things all the time, different projects, and more often than not, the Government wins because it doesn't have to make a profit.  So, I believe you could do this more cheaply internally." [Former IRS Commissioner Mark Everson, House Ways and Means Subcommittee on Oversight hearing on April 6, 2006]

 

In addition to IRS officials, opposition to the IRS tax debt collection program has been voiced by a growing number of major public interest groups, tax experts, and the National Taxpayer Advocacy Panel, whose members are appointed by the Internal Revenue Service (IRS) and the Treasury Department.  

 

Furthermore, private companies that collect federal income taxes have been repeatedly criticized for using intimidating and sometimes deceptive tactics against taxpayers.  Numerous cases have been identified that illustrate taxpayer harassment, abusive calling, and violations of the Fair Debt Collection Act, taxpayer rights, and taxpayer return disclosure protections.  For example, one elderly couple was called 150 times by a private collection company asking for a taxpayer.  Within the first five calls, the debt collector knew that the taxpayer did not reside at the home, but calls continued for 27 more days with up to seven calls per day.  

 

Other cases involve people in nursing homes, those serving in Iraq, innocent spouses and those subject to identity theft.  The Federal Trade Commission has 130 complaints likely to involve the private tax debt contractors, and the National Taxpayer Advocate, an independent official within the IRS, has many more. With bipartisan support, the House has twice passed legislation to stop the private collection of federal taxes, most recently in the Roth amendment to the fiscal year 2007 Treasury Appropriations bill.  

 

The Tax Collection Responsibility Act also: 

 

·        Delays the withholding requirement on certain governmental payments for goods and services. The provision would delay, for one year (to December 31, 2011), the application of the three percent withholding requirement on government payments to contractors and small businesses for goods and services.

 

·        Discourages individuals who renounce their U.S. citizenship to avoid paying taxes. The bill strengthens current law to ensure that certain high net-worth taxpayers cannot renounce their U.S. citizenship or terminate their U.S. residence in order to avoid U.S. taxes. Except for those with modest incomes or net worth, the bill would tax individuals on appreciation over $600,000 in their assets when they renounce their citizenship or terminate their long-term U.S. residency.  

 

·        Increases penalties for failing to file certain returns.  The bill includes a scaled-back version of the Treasury Department’s proposal to increase penalties (per return and annual cap) on failures by independent contractors to provide Form 1099 information returns.

 

 

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