National Taxpayer Advocate Nina Olson’s view on a select IRS initiative to collect past-due taxes from filers in Arkansas and nationally is quite clear.
She hates it.
In fact, she calls it an “end-run around congressional safeguards” that has resulted in illogical and unfair outcomes for many thousands of already strapped taxpayers.
The program was authorized just last year by the U.S. Congress, motivated by the fact that the IRS is an overwrought agency in need of help to timely get its job done.
That nod to reality resulted in the IRS being given license to essentially outsource its customary collection duties to private firms working on its behalf. Those entities pursue debtors identified by the IRS, attempting to collect taxes owed in arrears.
Olson points to broad-based evidence indicating that the arrangement has been a dismal failure. Centrally, she notes these points:
- A woefully low collection rate for targeted receivables; and
- Misidentification of individuals and families it makes sense to proceed against
As to the first point, Olson notes an astoundingly low collection rate on tax debts transferred to private companies for enforcement action.
And she looks no further than agency-derived data to underscore her concerns. Reportedly, less than 1% of identified amounts due over a measuring period last year were collected.
And as to the second point, Olson charges the companies with far too often targeting taxpayers who are flatly unable to make payments. Her office’s review of relevant statistics indicates that nearly one-fifth of assigned files involve individuals/families that fall beneath the government’s threshold for poverty.
For those reasons, argues Olson, program benefits are far exceeded by the widespread harm collection efforts yield for targeted filers. The blame for that, she says, is squarely on the on the IRS.
“The harm to these taxpayers is something [agency] leadership consciously decided to do,” Olson recently stated in her annual congressional report.