CQ TODAY MIDDAY UPDATE
July 18, 2007 – 1:41 p.m.
House Panel Approves Ban on IRS Use of Private Tax Collectors

The House Ways and Means Committee capped a long-running dispute Wednesday by approving a bill to revoke the Internal Revenue Service’s ability to use private debt collectors.

The vote was 23-18, with John Tanner of Tennessee the only Democrat joining Republicans in voting “no.”

Democrats and the National Treasury Employees Union have been trying to eliminate the private debt collection program since Congress created it in 2004 (PL 108-357). They argue that the IRS can collect taxes more efficiently and that the government should not outsource such a core government function.

Rep. John Lewis, D-Ga., said taxpayers were being harassed by the debt collectors. Democrats have argued that outsourcing tax collection opens the process to potential abuse because the collection companies receive a portion of the proceeds.

“The use of private debt collectors erodes the federal tax system, the public’s trust and the Treasury,” Lewis said.

Yet Republicans contend that the program allows the government to take in money that would otherwise go uncollected because the IRS focuses on larger cases.

The tax collection program provision is the highlight of a tax bill (HR 3056) that also imposes a new tax on expatriates, increases some penalties, and delays implementation of a controversial new withholding rule for government contracts.

Source: CQ Today Midday Update
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