The pace of collections for the IRS’s private tax debt collection program has picked up in fiscal 2019, with its first-quarter collections amounting to more than half of what it brought in during the entirety of fiscal 2018.
The program, mandated by 2015’s Fixing America’s Surface Transportation Act, collected $41.9 million in tax debts in the first two and a half months of fiscal 2019 (through December 13, 2018), according to IRS data released March 12 by Senate Finance Committee Chair Chuck Grassley, R-Iowa. That compares with the $82.1 million it collected in all of fiscal 2018.
“The program is helping make the system fairer to those who follow the law and fulfill their civic responsibility,” said Grassley, who was instrumental in the program’s reinstatement after a failed 2009 experiment. “The pace of collections is also accelerating, showing the full potential of the program has yet to be achieved.”
The four private debt collection companies — CBE Group, ConServe, Performant, and Pioneer Credit Recovery — received $7.6 million in commissions from the start of the fiscal year through December 13 and have pulled in $23.6 million over the life of the program so far. The four firms have split $4.1 billion in tax receivables between them from 456,332 entities during that time period.
Two sections of the IRS quarterly update were missing and were promised in the next update. The first accounts for the impact of private contracts on the total number of unpaid tax assessments. The second measures the effect of the program on the number and dollar amount of assessments collected by IRS personnel after first contact by a private collector.
The latest IRS data doesn’t address concerns expressed by National Taxpayer Advocate Nina Olson that the program targets vulnerable low-income and elderly taxpayers for collections even when they can’t afford them. Nor does the IRS data offer any rebuttal to a September 2018 Treasury Inspector General for Tax Administration report that faulted private collection agencies and the IRS for lax reporting of possible violations of the Fair Tax Debt Collection Practices Act.