In April 2014, Sen. Chuck Schumer (D-NY) proposed legislation that would turn outstanding tax debt over to private debt collection firms in order to maximize effectiveness. Sen. Schumer’s plan calls for any such funds that have remained uncollected for over a year to be forwarded to one of four private debt collection companies. The plan has been included as part of Senate bill S. 2260, or the EXPIRE (Expiring Provisions Improvement Reform and Efficiency) Act, which was sponsored by a different politician, Sen. Ron Wyden (D-OR). Schumer’s portion of the bill has bipartisan support, as well as critics from both sides of the political spectrum
One concern critics have lobbed at Schumer is the fact that two out of the four debt collection companies mentioned in the legislation are based in New York, the Senator’s home state. Some believe that Schumer’s bill seems to be as much about creating local jobs and keeping constituents happy as anything.
Another issue with the proposed plan is that it has been attempted before — once in 1996-1997 and once as recently as 2006-2009. Both of those attempts were widely viewed as unsuccessful, largely due to the costs of actually running the programs, as well as the cut taken by the private companies.
The bill raises ethical concerns as well as broader questions regarding the role of government in taxes. Private companies would receive a percentage of the money collected, thereby increasing their incentive to collect from individuals that may not have the necessary funds. The bill could also give private companies the power to unfairly target low income individuals, whereas the IRS currently helps negotiate payment plans or delays collections on a case-by-case basis for those struggling financially.
For those who owe back taxes to the IRS, this is the best course of action: Consult with an expert at an experienced tax resolution firm. Wall and Associates, Inc., one of the nation’s leading tax consultants, says that more often than not, you can benefit from expert advice on how to deal with the IRS.
Not a solicitation for legal services.