Is the IRS’s Automated Collection System Effective?
The Automated Collection System – what is it? The Automated Collection System (ACS) handles Integrated Data Retrieval System (IDRS) balance due and non-filer cases needing telephone contact for resolution. Suffice to say, taxpayers who owe the IRS money is a major IRS issue, and the ACS contacts these taxpayers through its computerized network. Data stored in the ACS include taxpayer and audit information. This was created in the 1980s to provide taxpayer examiners an opportunity to communicate with delinquent taxpayers, examine cases, and give notices. By contacting creditors and collecting court records, corporate files, and bank statements, the ACS verifies every piece of information stored in it. The system is integrated with checks for consistency and validity. Is using the Automated Collection System effective in collecting taxes owed? Recently, a congressional hearing was held to determine if ACS or privatization was the most efficient and effective method of collecting taxes. ACS is much less costly, as argued by consumer tax advocates opposed to privatization. Nina Olsen, the IRS’s National Taxpayer Advocate, compared the expenses of running private outsourced collections against ACS. Including commissions of up to 24% per amount collected, the expense of the private collection program is $12 million each year. With only $23 million in collections, net revenues are just at $11 million. Revenues could total up to $91.8 million to $145 million by using the ACS, with no costly commissions and an investment of only $7 million. The government spends about $81 million every year by privatizing collection. On the other hand, the IRS says that it has resorted to outsourcing because it can’t afford to employ more revenue officers to handle the IRS problem of debt collection. The IRS is now testing the efficacy of the private debt collection process by taking control over particular cases that were given to debt collection firms and handling them in-house. They are planning to compare the results to decide which method is more efficient. Colleen Kelley, the president of the National Treasury Employees Union (NTEU), testified at the hearing: "There has been no question from the outset that using private companies to collect taxes is far more expensive than having trained, accountable IRS employees perform this work and poses a severe and unnecessary risk to taxpayers’ sensitive and personal information." Kelley also emphasizes the fact that IRS employees are some of the most efficient tax collectors in the United States in her opposition to the private collection of federal taxes. For instance, the cost of collection for a debt of $100 by IRS officers was just 40 cents. Despite a considerable decline in the number of IRS officers, this is a two cent drop from 2007. Ms. Kelley says, "The IRS runs one of the most cost-efficient tax collection systems in the world, yet this administration insists on forging ahead with its costly privatization scheme in spite of dismal financial results and ever-growing opposition." The government can recoup revenue from unpaid taxes with the ACS. Private debt collection is costly as opposed to the cost efficient job done by the IRS employees.
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