II 

110TH CONGRESS 

1ST SESSION S. 335 

To prohibit the Internal Revenue Service from using private debt collection 

companies, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 18, 2007 

Mr. DORGAN (for himself, Mrs. MURRAY, Ms. MIKULSKI, Mr. AKAKA, Mr. 

LEAHY, Mr. LEVIN, Mr. KENNEDY, Ms. CANTWELL, Mr. ROCKEFELLER, 

Mr. KERRY, Mr. INOUYE, Mr. CARDIN, Mrs. BOXER, Mr. LIEBERMAN, 

Mr. MENENDEZ, Mrs. FEINSTEIN, and Mr. LAUTENBERG) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To prohibit the Internal Revenue Service from using private 

debt collection companies, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. PROHIBITION ON USE BY INTERNAL REVENUE 

4 SERVICE OF PRIVATE DEBT COLLECTORS. 

5 (a) FINDINGS.—Congress finds the following: 

6 (1) The Internal Revenue Service announced 

7 plans to outsource part of its tax debt collection reVerDate Aug 31 2005 03:32 Jan 20, 2007 Jkt 059200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S335.IS S335

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1 sponsibilities to private debt collection companies be2 ginning on September 7, 2006. 

3 (2) The Internal Revenue Service intends to 

4 turn over confidential information involving over 

5 2,500,000 taxpayer accounts to 12 private compa6 nies for debt collection purposes when its plan is 

7 fully implemented. 

8 (3) Recent evidence continues to suggest that 

9 the Internal Revenue Service does not have adequate 

10 systems in place to ensure that taxpayer information 

11 shared with private debt collection companies is 

12 properly secured and that such information will not 

13 be accessible to those who would misuse such infor14 mation. 

15 (4) During the initial phase of its plan, the In16 ternal Revenue Service has agreed to pay very large 

17 commissions of 21 to 24 percent of the amount of 

18 tax debt collected by 3 private debt collection compa19 nies on cases that the Internal Revenue Service con20 siders relatively simple. 

21 (5) The Internal Revenue Service failed miser22 ably when it attempted a similar tax debt collection 

23 privatization plan in 1996 and found that private 

24 debt collectors harassed many taxpayers, violated 

25 Federal debt collection laws, and did not properly seVerDate Aug 31 2005 03:32 Jan 20, 2007 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S335.IS S335

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1 cure sensitive taxpayer information as required by 

2 law. 

3 (6) The use of Internal Revenue Service em4 ployees to collect tax debt would cost only 3 cents 

5 for every dollar collected while the use of private 

6 debt collectors would cost almost 25 cents for every 

7 dollar collected. 

8 (7) The National Taxpayer Advocate, an inde9 pendent voice in the Internal Revenue Service for 

10 taxpayers, has called for the immediate termination 

11 of the private debt collection program calling it an 

12 exercise in futility and vastly more expensive than 

13 the Internal Revenue Service ever imagined. 

14 (8) The National Taxpayer Advocate has also 

15 warned Congress that private debt collection compa16 nies operating under rules of profit maximization 

17 could have less incentive to provide important tax18 payer rights training to their employees. 

19 (9) The collection of tax revenue is a core func20 tion of the Internal Revenue Service and appropriate 

21 Internal Revenue Service staffing should be assigned 

22 to this function to achieve debt collection objectives. 

23 (10) Taxpayers trust the Internal Revenue 

24 Service to keep their tax return information con25 fidential and expect that those who collect taxes are 


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1 not part of a money-making venture with profit mo2 tive as the overriding principle. 

3 (11) The Taxpayer Advocacy Panel, a nation4 wide advisory group appointed by the Secretary of 

5 the Treasury to improve the responsiveness of the 

6 Internal Revenue Service to the needs of taxpayers, 

7 has called on the Internal Revenue Service to aban8 don all plans to outsource any taxpayer debts and to 

9 restrict collection activities to properly trained and 

10 proficient Internal Revenue Service personnel. 

11 (12) In June 2006, the United States House of 

12 Representatives overwhelmingly passed a fiscal year 

13 2007 spending bill funding the Internal Revenue 

14 Service that included language prohibiting the Inter15 nal Revenue Service from using any of such funds 

16 for its private tax debt collection initiative. 

17 (13) A year-long Government Accountability 

18 Office examination of the private debt collection pro19 gram issued in September 2006 found that, like the 

20 1996 pilot, the program may actually lose money by 

21 the scheduled conclusion of its initial phase in De22 cember 2007. 

23 (b) PROHIBITION ON USE OF PRIVATE DEBT COL24 LECTORS.—Notwithstanding section 6306 of the Internal 

25 Revenue Code of 1986, the Internal Revenue Service shall 


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1 suspend immediately and indefinitely the use of private 

2 debt collection companies, and no funds made available to 

3 the Internal Revenue Service for fiscal year 2007 and in 

4 any subsequent fiscal years shall be used to enter into, 

5 renew, extend, administer, implement, enforce, or provide 

6 oversight of any qualified tax collection contract (as de7 fined in section 6306(b) of such Code). 

Æ 


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