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Bush and the IRS

by Laurent GUERBY Sun Aug 20th, 2006 at 05:46:49 PM EST

A nice story on the NYT, found via Angry Bear and Dean Baker:

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. [...]

Nothing short of incredible?

Icing on the cake:

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.

Old fashioned corruption.

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.

Creative accounting...

PS: feel free to post a story about that at Daily Kos.

In french on my blog.
by Laurent GUERBY on Sun Aug 20th, 2006 at 05:47:35 PM EST
Same sort of government accounting logic as Private Finance Initiative (government funded schools and hospitals built and run by private enterprise) in the UK. If its off the budget and profits the private sector, it does not matter that it will in the long run lose the state money compared to doing it all on the budget in the normal way.
by Gary J on Sun Aug 20th, 2006 at 06:21:39 PM EST
Saw this story on "The Situation Room" today as a topic for the viewer-response segment.  The Hollywood image of a stereotypical Italian mobster breaking the legs of those who don't pay up comes to mind.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Aug 22nd, 2006 at 04:38:01 PM EST
Funny :)
by Laurent GUERBY on Tue Aug 22nd, 2006 at 05:12:09 PM EST
[ Parent ]
Yes...I can see it getting way out of hand...

We are all in the gutter, but some of us are looking at the stars. Oscar Wilde
by Sam on Tue Aug 22nd, 2006 at 05:30:12 PM EST
[ Parent ]
Yes, as if giving the beancounters their own army wasn't ridiculous enough, now we have to deal with it making offers we can't refuse.

(Sorry, it was too easy.)

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Aug 22nd, 2006 at 07:22:50 PM EST
[ Parent ]
Breaking legs and stuff -- that's quite a fantasy you have!

Let's think realistically here. These tax-collecting companies will be under competitive pressures to extract money efficiently, and will therefore use methods that are quick, low-cost, and effective, so... well...

Let's look at it another way. Remember, in open markets companies must treat people relatively well, because potential workers can withhold their labor and potential customers can withhold their money and use it to buy something else, so these tax-collecting companies can't mistreat people by... um...

Well, probably not actual legs, of course. Waterboarding?

Words and ideas I offer here may be used freely and without attribution.

by technopolitical on Wed Aug 23rd, 2006 at 03:04:01 AM EST
[ Parent ]
The IRS has already made it quite clear that it simply needs to be allowed to hire a few more employees, and that this would cost less than bringing in these companies.  Don't think of what I said as being a complete fantasy.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Wed Aug 23rd, 2006 at 09:37:11 AM EST
[ Parent ]
You're not convinced that they'll treat their customers well? That is, their non-customers who have no choice about it?

Words and ideas I offer here may be used freely and without attribution.
by technopolitical on Thu Aug 24th, 2006 at 05:04:02 AM EST
[ Parent ]

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