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Thread: unwelcome tax news ...

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    Banned Melonie's Avatar
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    Default unwelcome tax news ...

    from NY Times (full text posted cuz NYTimes kills news links after 24 hours)

    "August 20, 2006
    I.R.S. Enlists Help in Collecting Delinquent Taxes
    By DAVID CAY JOHNSTON

    If you owe back taxes to the federal government, the next call asking you to pay may come not from an Internal Revenue Service officer, but from a private debt collector.

    Within two weeks, the I.R.S. will turn over data on 12,500 taxpayers — each of whom owes $25,000 or less in back taxes — to three collection agencies. Larger debtors will continue to be pursued by I.R.S. officers.

    The move, an initiative of the Bush administration, represents the first step in a broader plan to outsource the collection of smaller tax debts to private companies over time. Although I.R.S. officials acknowledge that this will be much more expensive than doing it internally, they say that Congress has forced their hand by refusing to let them hire more revenue officers, who could pull in a lot of easy-to-collect money.

    The private debt collection program is expected to bring in $1.4 billion over 10 years, with the collection agencies keeping about $330 million of that, or 22 to 24 cents on the dollar.

    By hiring more revenue officers, the I.R.S. could collect more than $9 billion each year and spend only $296 million — or about three cents on the dollar — to do so, Charles O. Rossotti, the computer systems entrepreneur who was commissioner from 1997 to 2002, told Congress four years ago.

    I.R.S. officials on Friday characterized those figures as correct, but said that the plan Mr. Rossotti had proposed had been forestalled by Congress, which declined to authorize it to hire more revenue officers.

    Critics of the privatization plan point not only to the higher cost but also to what they say is a greater potential for abuse. With private companies in the mix, they say, debtors could more easily be tricked into paying money to scam artists using spoof Web sites or other schemes, a problem the I.R.S. alerted taxpayers to in April. Brady R. Bennett, collections director for the I.R.S., said that by 2008, about 350,000 past-due tax records will be distributed among about 10 private debt-collection agencies. To guard against fraud, he said, the agencies will contact taxpayers only by telephone or mail — not the Internet — and will instruct them to send all payments directly to the United States Treasury, not the private collection agency.

    One of the three companies selected by the I.R.S. is a law firm in Austin, Tex., where a former partner, Juan Peña, admitted in 2002 that he paid bribes to win a collection contract from the city of San Antonio. He went to jail for the crime.

    Last month the same law firm, Linebarger Goggan Blair & Sampson, was again in the news. One of its competitors, Municipal Services Bureau, also of Austin, sued Brownsville, Tex., charging that the city improperly gave the Linebarger firm a collections contract that it suggested was influenced by campaign contributions to two city commissioners.

    Joe Householder, a spokesman for Linebarger, which specializes in delinquent tax collections, said it had resolved the issues raised by the Peña case in 2002 and that it believed it had acted properly in Brownsville. The mayor of Brownsville, Eddie Treviño Jr., said that the contract vote had been unanimous and scoffed at the accusations of misconduct.

    The two other companies that have won debt collection contracts from the I.R.S. are Pioneer Credit Recovery of Arcade, N.Y., a division of the SLM Corporation, and the CBE Group of Waterloo, Iowa.

    The main objection so far to the privatization program is that it is more expensive than internal collection. “I freely admit it,” Mark W. Everson, the tax commissioner, told a House of Representatives committee in March.

    Privatizing government services is often promoted as a way to cut costs. But the government would probably net $1.1 billion from private debt collectors over 10 years, compared with the $87 billion that could be reaped if the agency hired more revenue officers, as Mr. Rossotti had recommended.

    Taxpayer rights are at risk with privatization, Nina B. Olson, the I.R.S. taxpayer advocate, warned Congress earlier this year. “Because private collectors will operate under rules of profit maximization rather than the I.R.S.’s customer-service based policy,” she warned, the private collectors may have less incentive to safeguard taxpayer rights.

    Al Cleland, a retired I.R.S. tax collector in Minnesota, predicted that using private collectors would cause some debtors to owe more.

    “We always told people to get current on their taxes first, so they would not have more penalties added, and then work on paying off their back taxes,” Mr. Cleland said. “A private collection agency has no incentive to tell taxpayers that, so people will pay more penalties.”

    Mr. Bennett of the I.R.S. said that such advice was correct, but that it applied primarily to small business owners, whose cases will not be sent to the private agencies.

    Under federal budget rules, money spent to hire tax collectors is treated as a discretionary expense, and Congress is cutting discretionary spending. In business terms, the rules treat the I.R.S. as a cost center, not as the government’s profit center.

    The private debt-collection program, however, is outside the budget rules because, except for the start-up costs, the collectors are to be paid from the proceeds."

  2. #2
    God/dess Deogol's Avatar
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    Default Re: unwelcome tax news ...

    This is going to net some good fodder for the newspapers! Hell, already they are spelling out CORRUPTION.

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    Veteran Member Cristalla's Avatar
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    Default Re: unwelcome tax news ...

    1.4 billions in 10 years?
    how many TRILLIONS did bush waste in the last year for the war,again?

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    Banned Melonie's Avatar
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    Default Re: unwelcome tax news ...

    ^^^ not to go off topic too far, but the CBO lists the total multi-year cumulative costs of the Iraq war at something around $308 billion dollars so far. In perspective, this amount is almost equal to a single year's cost of providing Medicaid benefits across the board. The $308 billion in cumulative multi-year costs is certainly less than the total multi-year cumulative costs of providing Medicaid benefits to illegal aliens to date.

    "Today, the [medicaid] program covers 53 million people -- nearly one in every six Americans -- and costs $300 billion a year in federal and state funds, recently surpassing spending on the federal Medicare program. In some states, Medicaid accounts for one-third of the budget." from

    I only mention the comparison to point out that Americans choose to tolerate similar costs to those of the Iraq war on a routine basis.


    Back on topic, dwelling on the early details of the press release is not really conclusive because much of the specifics wiil be subject to change. I took the important point to be that the gov't has officially authorized the use of third party 'bounty hunters' to track down unpaid income taxes, with the 'bounty hunters' being paid a percentage of the amounts they are able to recover. If you stop and think for a second, third party 'bounty hunters' are going to be able to apply statistical profiling techniques when seeking out particular segments of taxpayers who are 'ripe' for collecting unpaid income taxes. Guess where dancers fall into that statistical profile !!!

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    Default Re: unwelcome tax news ...

    We need to increase our qualifications for people who want to run for goverment offices. Than hierd new people. Because the one who are running our country now needs to be fired! They are bad with accounting descion making, and they are running our country in the ground.
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    God/dess Deogol's Avatar
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    Default Re: unwelcome tax news ...

    ^^^ fuckin eh! fuckin eh!

    But to do that, we need to get more voters out the door than the current "whats in it for me" crowd that keeps putting these idiots in power.

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    Banned Melonie's Avatar
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    Default Re: unwelcome tax news ...

    ^^^ oh, granted ! As I said, not too much can really be gleaned from press releases at this very early stage of the 'game' - and I agree with you that there is a major element of politicking behind this. But the precedent of paying third party 'bounty hunters' on a federal level to do delinquent tax collections is damn disturbing --- it was bad enough when a couple of states introduced that principle (i.e. California). Plus there are already precedents that 'tipsters' can be paid a portion of the delinquent taxes recovered as a result of their tipoffs. This would make for a very cozy arrangement where third party 'bounty hunters' tip off the IRS to probable delinquent taxpayers based on statistical profiling, which the IRS will then spend about 5 minutes of computer time on by requesting financial network data on the allegedly delinquent taxpayer to establish probable cause, and then turning the collection right back over to the 'bounty hunters'. Such an arrangement would potentially rake in billions, at essentially no extra out of pocket cost to the IRS versus not investigating / collecting themselves due to priorities and lack of human audit resources.

    The 'fallback position' is unfortunately no better, because the fallback position would be congress making a massive new appropriation to allow the IRS to add an army of additional human agents. However, congress recently made a special IRS appropriation to hire additional human agents for the specific purpose of investigating tax evasion in the 'adult industry' ... an industry which strip clubs are classified as being part of.

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