Déjà Vû: Private Tax Collection Leads to Corruption

The end of January was the beginning of tax season in America. After employers mailed out W-2s, workers started the long trudge towards April 18th.

The Internal Revenue Service is notorious for its abysmal service. In 2015, the agency reported that criminals had “potentially accessed” more than 700,000 total accounts between 2014 and 2015. In 2016, IRS Commissioner John Koskinen told the Washington Post that they expect to answer 47 percent of calls — significant growth from the previous year’s 37 percent.

As if privacy issues and poor customer service weren’t evidence enough of the IRS’s irresponsibility, the agency has recently re-adopted the use of private companies to help collect taxes. In 1996 and 2006, the IRS employed private companies to help collect delinquent tax debt. The program failed miserably both times. Nevertheless, in a stunning feat of legislation blind to history, Congress again permitted the use of private tax collection by slipping it into the unrelated “Fixing America’s Surface Transportation Act” in 2015.

Outsourcing collection to private companies might sound like an excellent way for the IRS to surrender some of its excess bureaucratic power and streamline its processes. But it actually creates substantial problems. A recent National Taxpayer Advocate report outlines several reasons why this is the case.

First, these programs fail because they leave the door wide open for privacy violations and tax scammers. The IRS has already sustained multiple security breaches, and handing over accounts to an outside source makes taxpayer information even more vulnerable. And scammers, already rampant, no longer even need to pretend to be from the IRS. When it becomes known that the government is handing over enforcement duties to non-government entities, it will be much easier to defraud anxious Americans out of the hard-earned income on which they already pay taxes.