Opponents of outsourcing some IRS debt collection functions have been itching for a chance to eliminate the practice for years.

On Wednesday, they will get their best chance yet.

The House is expected to pass a bill (HR 3056) that would end an IRS program under which private companies contact delinquent taxpayers and urge them to pay.

Although the tax collection program is relatively small, both sides anticipate an intense floor debate over the private sector’s role in core government functions.

Democrats, backed by the National Treasury Employees Union, argue that private companies should not be responsible for an inherently governmental job such as tax collection.

They also contend that IRS employees collect the money more efficiently, pointing to commissions approaching 25 percent that private firms can earn.

Critics also have complained about tactics used by private collection companies. During a May hearing, Democrats played recordings of calls to taxpayers and said company representatives were harassing them with repeated messages.

Meanwhile, Republicans argue that the private sector can perform many functions more efficiently than government employees. The GOP and the collections industry contend that Democrats’ zeal to end private debt collection contradicts their message about seeking to close the “tax gap” between money owed and money collected.

According to the Joint Committee on Taxation, eliminating the private collection program would cost the government $1.1 billion over the next decade. That’s because the IRS says it would not use new resources to go after the kinds of low-yield cases that are funneled to the private collection agencies.

Jeff Trinca, a lobbyist for the debt collection industry, said that by ending the program, Democrats would be giving up money they could otherwise use for a variety of programs. “You could use [the money] for SCHIP,” Trinca said. “You could use it for Pell grants. You could use it for the war on terrorism.”

Republicans also contend that the private companies are adequately supervised by the IRS and operate efficiently. “They are experts at taking and pursuing that debt in a responsible fashion,” said Thomas M. Reynolds, R-N.Y., a Ways and Means Committee member whose district includes one of the two companies under contract with the IRS.

Both sides argue that their preferred outcome would yield more IRS employees. Proponents of the bill contend that the money the IRS is now spending on oversight could be used to hire more government tax collectors. The companies respond by noting that the program allows the Treasury Department to keep some of the collections, allowing the IRS to hire more government tax collectors.

Congress created the debt collection program as part of the 2004 corporate tax overhaul (PL 108-357), and it has been under assault since its inception.

In previous years, House appropriations bills contained provisions that would have limited funding for the program, and this year’s Senate version of the Financial Services spending bill (HR 2829) could have a similar effect. But none of those measures has become law, and the House has never taken a recorded vote on the issue.

Senators appear much less interested than their House counterparts in ending the program. In particular, Sen. Charles E. Grassley, R-Iowa, whose state is home to a collection company that participates in the program, has expressed his support for the IRS using private debt collectors.

Sen. Byron L. Dorgan, D-N.D., has sponsored a bill (S 335) that would end the program, which began operating last year. Dorgan’s bill has 22 cosponsors, although no Republicans have signed on.

Yet Maureen Gilman, legislative director for the Treasury employees’ union, sounded optimistic about the bill’s chances in the Senate. “It’ll be more difficult there, but I think we’re in good shape overall getting this across the finish line,” she said.

The House bill on the floor Wednesday also would address an issue of concern to businesses, state and local governments and members of both parties. The bill would delay from 2011 to 2012 a requirement that federal, state and local governments withhold 3 percent of their payments to contractors.

The requirement was intended to make sure that companies pay taxes on income they receive from government contract work, but industry and government groups have complained that it will unfairly punish companies that follow the rules.

Under pay-as-you-go budget rules, the bill would raise $1.2 billion in revenue, more than offsetting the measure’s cost. The largest offset would impose a new tax on people who renounce their U.S. citizenship. The bill would require a “mark to market” tax on capital assets that would treat such assets as if they had been sold the day before such taxpayers became expatriates.

Other changes would toughen penalties against taxpayers who fail to file informational returns with the IRS. In addition, the bill would allow the IRS to impose penalties and interest indefinitely on a taxpayer even if the person has not received formal notice from the agency. Earlier this year (PL 110-28), Congress extended the time limit on those penalties from 18 months to 36 months.

The measure is sponsored by Ways and Means Chairman Charles B. Rangel, D-N.Y. The committee approved the measure, 23-18, in July, with John Tanner, D-Tenn., joining all panel Republicans in voting against it.