II 

109TH CONGRESS 

2D SESSION S. 3887 

To prohibit the Internal Revenue Service from using private debt collection 

companies, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 11, 2006 

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

FEINSTEIN, Mr. AKAKA, Mr. KERRY, Mr. KENNEDY, and Mr. 

LIEBERMAN) 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 re8 sponsibilities to private debt collection companies be9 ginning on September 7, 2006. 


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1 (2) The Internal Revenue Service intends to 

2 turn over confidential information involving over 

3 2,500,000 taxpayer accounts to 10 private compa4 nies for debt collection purposes when its plan is 

5 fully implemented. 

6 (3) Recent evidence continues to suggest that 

7 the Internal Revenue Service does not have adequate 

8 systems in place to ensure that taxpayer information 

9 shared with private debt collection companies is 

10 properly secured and that such information will not 

11 be accessible to those who would misuse such infor12 mation. 

13 (4) During the initial phase of its plan, the In14 ternal Revenue Service has agreed to pay very large 

15 commissions of 21 to 24 percent of the amount of 

16 tax debt collected by 3 private debt collection compa17 nies on cases that the Internal Revenue Service con18 siders relatively simple. 

19 (5) The Internal Revenue Service failed miser20 ably when it attempted a similar tax debt collection 

21 privatization plan in 1996 and found that private 

22 debt collectors harassed many taxpayers, violated 

23 Federal debt collection laws, and did not properly se24 cure sensitive taxpayer information as required by 

25 law. 


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1 (6) The use of Internal Revenue Service em2 ployees to collect tax debt would cost only 3 cents 

3 for every dollar collected while the use of private 

4 debt collectors would cost almost 25 cents for every 

5 dollar collected. 

6 (7) The current National Taxpayer Advocate, 

7 an independent voice in the Internal Revenue Service 

8 for taxpayers, has called this initiative an exercise in 

9 futility and vastly more expensive than the Internal 

10 Revenue Service ever imagined. 

11 (8) The National Taxpayer Advocate has also 

12 warned Congress that private debt collection compa13 nies operating under rules of profit maximization 

14 could have less incentive to provide important tax15 payer rights training to their employees. 

16 (9) The collection of tax revenue is a core func17 tion of the Internal Revenue Service and appropriate 

18 Internal Revenue Service staffing should be assigned 

19 to this function to achieve debt collection objectives. 

20 (10) Taxpayers have every right to expect the 

21 Internal Revenue Service to keep their tax return in22 formation confidential and be assured that those 

23 who collect taxes are not part of a money-making 

24 venture with profit motive as the overriding prin25 ciple. 


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1 (11) The Taxpayer Advocacy Panel, a nation2 wide advisory group appointed by the Secretary of 

3 the Treasury to improve the responsiveness of the 

4 Internal Revenue Service to the needs of taxpayers, 

5 recently called on the Internal Revenue Service to 

6 abandon all plans to outsource any taxpayer debts 

7 and to restrict collection activities to properly 

8 trained and proficient Internal Revenue Service per9 sonnel. 

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

11 Representatives overwhelmingly passed a fiscal year 

12 2007 spending bill funding the Internal Revenue 

13 Service, that included language prohibiting the In14 ternal Revenue Service from using any of such funds 

15 for its private tax debt collection initiative. 

16 (b) PROHIBITION ON USE OF PRIVATE DEBT COL17 LECTORS.—Notwithstanding section 6306 of the Internal 

18 Revenue Code of 1986, the Internal Revenue Service shall 

19 suspend immediately and indefinitely its plan to use pri20 vate debt collection companies, and no funds made avail21 able to the Internal Revenue Service for fiscal year 2006 

22 and in any subsequent fiscal years shall be used to enter 

23 into, renew, extend, administer, implement, enforce, or 


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1 provide oversight of any qualified tax collection contract 

2 (as defined in section 6306(b) of such Code). 

Æ 


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