Year 1 results: IRS Private Debt Collection Program successfully boosts agency and U.S. Treasury
Washington, D.C. (August 22, 2018) – Today, the Partnership for Tax Compliance praised the results stemming from the first year of the IRS’ Private Debt Collection (PDC) program. This successful public/private partnership works to bolster the U.S. Treasury, strengthen the effectiveness of the Internal Revenue Service (IRS) and ensure fairness in the federal tax system.
Based on data reported by the IRS through the end of June 2018, the PDC Program is fully cash positive after the first year of operation. Agency projections indicate that trend will continue going forward.
IRS data shows that the program has brought in more than $56 million in tax revenue for the U.S. Treasury and that total costs – upfront capital investments, commissions paid, and oversight – have totaled approximately $55 million. The data also indicates that after paying for oversight costs, year one revenue generated by the PDC program has provided the IRS with $9 million in a “Special Compliance Personnel Program Fund” to hire and train new IRS personnel later this calendar year.
The PDC program was implemented slowly and cautiously over the course of the first year to ensure adherence to IRS rules and procedures. As the IRS now begins to expand the PDC program, as required by Congress, there will be additional program investments, however the revenue collected is expected to continue to significantly increase, based on IRS projections.
“The year one results clearly demonstrate that the PDC Program is working for the Treasury, working for the IRS and working for American taxpayers,” said Kristin Walter, spokesperson for the Partnership for Tax Compliance. “We look forward to continuing this important partnership with the IRS in year two.”
As the federal government struggles to fund infrastructure improvements and sustain entitlement programs, the IRS estimates that the tax gap – the difference between federal taxes owed and those paid each year – exceeds $400 billion. In addition, workforce shortages at the IRS have caused thousands of accounts in arrears to sit untouched for years, with billions lost as accounts age out of a 10-year statute of limitations. Resolving these resource issues and reducing a portion of the tax gap will provide the government with resources to hire staff and fund new and existing federal initiatives.
The PDC Program, mandated by Congress in 2015 and launched in April 2017, seeks to expand the customer service capacity of the IRS to offer a segment of taxpayers – those with uncontested tax underpayments – a variety of manageable and purely voluntary payment plans to help them pay down their tax obligations. These are accounts that would otherwise not have been contacted by the IRS previously due to staff shortages.
PDC contractors are limited to calling the assigned taxpayers in arrears and offering to facilitate payment arrangements tailored to their ability to pay. Taxpayers that set up payment arrangements via the PDC Program do not have to pay a “set up fee” of up to $225, as they would, when entering an installment plan directly with the IRS.
If a taxpayer shares that they cannot pay their tax obligation, even over time through a payment plan, they are removed from the PDC program and their account is referred back to the IRS. Taxpayers participating in the PDC Program also have the ability to restructure their payment plans along the way if their circumstances change.
This innovative tax compliance program requires that more than 50 percent of the funds collected go to the U.S. Treasury with another 25 percent of the collected funds going to the IRS to expand their internal collection capabilities. PDC contractors are subject to the same oversight as IRS agents. Contractor calls are monitored by the IRS and contractors are graded on implementation of taxpayer rights, customer service, statutory and contract requirements.
About the Partnership for Tax Compliance
The Partnership for Tax Compliance is a 501(c)6 non-profit organization that works to educate policymakers and taxpayers about the importance of the public/private partnerships that advance fair tax participation and bolster state and federal government treasuries by recovering tax underpayments. This new coalition aggregates and leverages the vast expertise of the private recovery companies that support the IRS PDC Program, including CBE Group, Performant Recovery, ConServe and Pioneer Credit Recovery. For more information, visit www.partnershipfortaxcompliance.org