The IRS Private Debt Collection Program Returns Nearly $1 Billion to Invest in Federal Programs
Companies partnered with the IRS have collected $624 million in tax underpayments, while funding SCP collection of an additional $345 million in outstanding tax revenue.
Washington, D.C. (April 14, 2021) – Today, the Senate Finance Committee released a new quarterly report detailing the progress of the Internal Revenue Service (IRS) Private Debt Collection (PDC) Program – which works to strengthen the U.S. Treasury and the effectiveness of the IRS by providing taxpayers with customized repayment solutions to help them satisfy lingering tax debt in a manageable way.
The IRS reports that as of September 17, 2020, the PDC Program has directly collected $624 million in voluntary payments of long past-due tax revenue, while providing ongoing funding for the agency’s new Special Compliance Personnel (SCP) Program, which has collected an additional $345 million in unpaid taxes. Together, the PDC and SCP Programs have returned nearly $1 billion in outstanding tax revenue to the federal government.
During the 2020 fiscal year, the PDC Program paused in support of taxpayers impacted by COVID-19. Despite COVID-related limitations during this time, the PDC program was able to continue to support taxpayers and collect $321.2 million in much-needed federal tax revenue, while maintaining “A” grades in both program quality and customer satisfaction (99 percent and 93 percent, respectively).
While the PDC Program’s primary focus is to directly bolster the treasury, 25 percent of the revenue collected is allocated to fund the ongoing work of the IRS SCP Program – a new department of IRS staff that serve as automated collection system customer representatives assisting taxpayers in resolving outstanding tax debt. Under that mandate, the PDC Program has contributed $112.5 million to support the IRS in hiring, training and sustaining 383 permanent SCP Program collections staff and fund program oversight.
“With ongoing concerns about the federal budget, Members of Congress are actively searching for revenue to fund federal initiatives,” said Kristin Walter, spokesperson for the Partnership for Tax Compliance. “In addition to adding more than half a billion dollars in tax revenue, previously thought to be uncollectible, the PDC Program is also instrumental in providing ongoing funding for other successful IRS tax compliance efforts. The PDC and SCP Programs work together seamlessly to strengthen the federal budget and help pay for critical federal efforts in the years ahead.”
Private Sector Best Practices Boost Federal Collections
Congress mandated the PDC Program in 2015, as part of bipartisan legislation, and officially launched in April 2017. The effort seeks to expand the customer service capacity of the IRS to offer a segment of taxpayers – those with uncontested tax underpayments – a variety of voluntary payment plans tailored to fit their particular budget to help them pay down their tax obligations over time.
Active tax underpayments currently total $131 billion. Each year, $20 to $30 billion of that tax revenue is lost as a portion of accounts age out due to the collection statute of limitations. As this segment of tax revenue is brought in by PDC program installment plans, overall federal solvency improves and the IRS can augment their collection and recovery capabilities by adding more collections staff.
“The data demonstrates that the PDC Program is working as intended – strengthening the U.S. Treasury, expanding IRS efforts to increase tax compliance and improving customer service to better support taxpayers,” said Walter.
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 coalition aggregates and leverages the vast expertise of the private recovery companies that support the IRS PDC Program, including CBE Group, ConServe and Pioneer Credit Recovery. For more information, visit www.partnershipfortaxcompliance.org