Debt Collectors On Welfare

Cross Posted From Article Of Faith:

This story in the New York Times this morning isn’t all that surprising:

“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. 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.”

Not only is this a continuance of the massive looting of the public coffers by this administration through “privatizing” what should otherwise be jobs done by the government, but in the case of debt collection it sets up a truly frightening scenario for those least able to defend themselves. Tax collection is first and foremost government’s responsibility because the chances of abuse are enormous.

Bob Sullivan who writes the blog The Red Tape Chronicles, has written eloquently about the dangers of this kind of privatization:

First, Sullivan notes that the number of collections is far higher than what was reported in the Times this morning: “The agency will turn over the debts of 150,000 Americans to three firms and expects to gather up payments of about $100 million during the next 24 months.” Note too that it’s just three companies who will reap the million dollar contracts.

And the debt collection industry itself is rightfully known as a rogues gallery of losers, con men, and other malcontents who take joy in preying on other people’s misfortune:

“The debt collection industry needs no introduction. It’s the most complained-about industry in the country, according to the Federal Trade Commission. Despite very clear rules laid out by the Fair Debt Collection Practices Act, collection agencies have a reputation for calling late at night and early in the morning, for harassing and menacing consumers during those calls, for bothering relatives and for making exaggerated threats. Tax collectors and debt collectors, a match made in heaven.”

Of course, as he also notes, not all debt collectors are scum, and not all tax cheats are “innocent”. We’ll grant that. However, the assurances by the I.R.S. that they will “monitor [debt collection] companies closely…require background checks on all employees…with information shared with outside firms limited to name, amount owed and contact information” is patently absurd.

Part of the reason these collections are being “outsourced” is because the I.R.S. severely understaffed. Who exactly is going to monitor these rogues if there isn’t anyone there to do the job of collection in the first place?

Be very afraid.

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3 Responses to Debt Collectors On Welfare

  1. Ginny in CO says:

    “Tax collectors and debt collectors, a match made in heaven.”

    Surely this match was made in hell?

    This kind of traumatizing of citizens is frightening. There may be a lot of cheating going on, and there is also probably a lot of evasion from tax laws that really do stifle individuals.

    Given how many people have lost jobs, businesses or had drastic income cuts during the Bush years, the number who owe taxes is not surprising either.

    Trust his rubber stamp congress to refuse the IRS more money to hire their own collectors. I’ve had to deal with the IRS twice. The first was frustrating because we had done what we were told by the IRS staff – and it turned out to be wrong. Even though it was maddening, there was nothing in the attitudes or words of the people we worked with that was anything but polite and helpful. The second was my own mistake and they were again very helpful and polite in getting it corrected.

  2. Be Afraid Indeed!! I once received an attempted collection notice from one of those debt collectors. The thing is, that it was for payment on a truck that was paid off 13 years prior! Thugs at best, and fits right in with the GOP.

  3. Donnie,

    It was paid off 13 years earlier? WTF? People should definitely be able to collect penalties from a company for something like that!