You may think that your debt is out of control, but it most likely pales in comparison to that of the federal government. With their spending habits, the government is continually trying to find ways to make money, including potentially outsourcing certain actions to the private sector. A popular idea that continually resurfaces is outsourcing the IRS’ debt collection.
Raising Money for the Highway Trust Fund
Recently, some Senate Republicans have proposed a bill to outsource IRS collection for outstanding tax debt to private collection agencies as a way to earn money to extend the Highway Trust Fund, according to Forbes. The Senate Finance Committee estimates it could raise $2.38 billion over a period of 10 years. Majority Leader Mitch McConnell and Senator Barbara Boxer have crafted the bill.
This is not the first time the government has considered privatizing tax debt collection. Over 140 years ago Congress first determined that privatizing loan collection was not a good idea, but the idea continually re-emerges as a way to earn money. It has been tried at least three times in the past, all to no avail. The last time they tried was in 2006, and it only lasted three years before it was deemed unsuccessful. The government actually ended up spending more money through having to pay the administration fees and commission to the companies, according to Government Executive.
The IRS Is the Best Solution
Although there are over 5 million taxpayers who owe money to the IRS, the agency already has an efficient solution in its agency, which is the most powerful collection agency around. Private collection agencies cannot compete with the power of the IRS. However, with the IRS losing employees due to budget cuts, it loses its efficacy. This leads to the IRS not bringing in as much money as it has in the past. However, as long as the federal budget allows the IRS to have the necessary staff, the agency can easily handle all the tax debt in the country, helping to bring in revenue to the country.
Although senators are trying to get this deal past, there is very little chance it will happen. History demonstrates that outsourcing tax collection is a bad idea that does not work. Opponents of the idea are fighting it by demonstrating that raising additional money through collection of tax debt would better be handled through providing the IRS with the resources it actually needs, rather than privatizing the collections.
How It Affects You
The senate plans to vote on the bill soon. You probably will not see your federal tax debt be handed over to private collection agencies, even though this is an idea of which some senators just cannot seem to let go. Even if it does happen, it will most likely not change much for the taxpayers. You will still have the same avenues for tax resolution if you owe money to the IRS.
You do not have to live life with the IRS breathing down your neck or enacting collection action, such as levies, tax garnishment, or liens. If you have an outstanding debt to the IRS, one of Fidelity Tax Relief’s tax professionals can help you find the best solution for paying off your debt and once again becoming compliant. Call us today at 877.372.2520 to initiate the Fidelity Resolution Model that ends with a settlement that benefits you.