The on-again, off-again drive to use private debt collection agencies at IRS is on hold.

This issue has more sides than a buffet at Kentucky Fried Chicken.

Rather than having federal employees, IRS Revenue Officers, come to your door and demand back taxes, private companies will be calling to persuade you to part with more money to pay the piper.

If this initiative gets off the ground, there will be more different companies participating in this effort than customers at a Ben & Jerry’s ice cream counter on April 15.  Up to 10, per Stephen Barr’s article today could be collecting taxes by 2008.

There is resistance.  It’s a hard nut to swallow when major changes are proposed in life, although I find it hard to believe that the American public really yearns to see the face of an IRS Revenue Officer versus a phone call from a faceless non-government agent.  Actually, I suspect people really don’t want contact from either.

Today’s privacy problems (Veteran Affairs and IRS laptops stolen or missing, which contained individual data) don’t help make the case to share more info with more people who may lose or share it with those not entitled to receive it.  Yet, with the government’s recent poor track in securing data, could the private sector do any worse?

Another argument against using private companies to perform a seemingly inherent governmental activity, which is non-contractible, is the fear of overzealous collection activity.  Colleen Kelley, head of the National Treasury Employees Union (NTEU), noted it was odd that IRS will connect company fees to the amount of money collected, especially since it forsook using that approach with its employees recently.  Ms. Kelley doesn’t say that NTEU was probably the biggest single reason for that, as the union feared that those employees who did not, for whatever reason, collect as much revenue as their colleagues, would suffer financially with lower performance appraisals.

A Congressman, Steven Rothman (D-N.J.), added that government collection activity costs IRS three cents on the dollar whereas this contract promises companies 21 and 24 percent of garnered revenue.  What’s not in the article is the amount of money IRS expects to collect from so-called direct enforcement activities, which these are.  It would be interesting to do the math and see if what the Representative avers is accurate.  One benefit to the government of this proposal is that companies may ultimately pursue lower revenue yield cases, which IRS never assigned to its employees.

What do you think about all this?  Are you adamantly opposed to contracting out what some would see as an inherently governmental activity?  Are you merely against contractors in any case?  Do you believe this is sensible approach?  Or, not a sensible approach. Regardless of your point of view, please share it and tell us why we feel that way.

Thx in advance for your participation!

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