Washington, D.C. - Mr. Speaker, I rise to announce that today I introduced the Taxpayer Abuse Prevention Act of 2005. If enacted into law, this bill would repeal the provision tacked onto the FY2005 Omnibus Appropriations bill that hands over the tax returns of millions of American taxpayers to private contractors to collect delinquent taxes, and to keep 25 percent of their take as a commission for services rendered.
This provision opens the door to taxpayer intimidation and abuse, practices that have been outlawed by Congress. This practice amounts to bounty-hunting – at taxpayer expense – by allowing collection agencies to harass those same American taxpayers, many of whom are guilty of nothing, with the incentive of collecting their commission as their primary motivation. Giving unaccountable outside bounty hunters unfettered access to Americans’ personal financial data poses a risk that we just cannot afford, and that is why these organizations oppose the IRS proposal: Citizens for Tax Justice, Consumer Federation of America, Consumers Union, National Consumer Law Center, National Consumers League.
Late last year, Congress enacted H.R. 4520, the corporate tax bill, which included a provision that will give the IRS the authority to use private collection agencies to collect tax debt. This means that up to 2.6 million tax returns – which until then were only scrutinized by federal government employees – will now be open to private collection agencies and an untold number of private debt collection staff.
What’s more worrisome is the IRS’ inability to oversee the work of these private debt collectors. A 1996 pilot program for private collection was so unsuccessful that a similar pilot program planned for 1997 was cancelled outright. The contractors used in the pilot programs regularly broke the Fair Debt Collection Practices Act, did not protect the security of personal taxpayer information, and even then failed to bring in a net increase in revenue.
The IRS has said that it has learned from the 1996 project and is better equipped to address the problems raised. However, even recent evidence is to the contrary. An eye-opening report by the Treasury Inspector General for Tax Administration (TIGTA Audit #200320010) shows how IRS contractors put taxpayers’ data at risk. The TIGTA audit found that the “lack of oversight of contractors resulted in serious security vulnerabilities.” The report, found that, “contractors blatantly circumvented IRS policies and procedures even when security personnel identified inappropriate practices.” In fact, the report found that contractors made hundreds of calls to taxpayers during times prohibited by the FDCPA, and that calls were even placed as early as 4:19 a.m.
The objective of the review was “to determine whether the Internal Revenue Service (IRS) has adequately protected Federal Government equipment and data from misuse by contractors.” The review found: “The involvement of non-IRS employees in critical IRS functions increases the risk of misuse or unauthorized disclosure of taxpayer data, and could lead to loss of equipment or sensitive taxpayer data through theft or sabotage.”
While IRS employees are explicitly forbidden from being evaluated on the basis of revenue collected, the private collection scheme would actually link contractor pay to the amount of revenue collection. This policy encourages contractors to use aggressive collection techniques to boost their remuneration. Furthermore, the IRS is currently liable for damages to a taxpayer resulting from the misuse of confidential information by an IRS employee, but taxpayers will not be able to recover damages from the federal government where contractors are guilty of malfeasance.
The House had already expressed its will that this provision not become law when it approved by voice vote an amendment to the FY2005 Treasury Appropriations bill that prevented the expenditure of any federal funds for private collection of federal taxes. Unfortunately, the Treasury Appropriations bill never became law, and the House-passed amendment was stripped out of the omnibus spending bill by the Republican leadership in the conference – behind closed doors, in the dead of night.
We must repeal this onerous provision. We must protect American taxpayers from intimidation and abuse. We must ensure that personal financial records are protected and remain private. Two decades ago this Congress passed the Fair Debt Collection Practices Act specifically to protect Americans from intimidation and abuse, but last year this Congress perpetrated an injustice by allowing these very abuses to go forward.
I urge my colleagues to join me in working with the IRS to find a more effective means of collecting delinquent tax debt collection and avoid this risky scheme altogether. Let’s pass the Taxpayer Abuse Prevention Act.
Thank you, Mr. Speaker.