The IRS Collected $6.7 Million in Back Taxes. They Spent $20 Million to do it.

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Few would argue that the bureaucracies that govern the United States run efficiently. Stories of ludicrous excess, though, are often mildly amusing. This one, though, might require more of an explanation. It seems the I.R.S. has been paying a large amount of money in their effort to recoup the money they are owed by U.S. citizens.

The problem is deeply rooted in how the I.R.S. is handling collections. “When Treasury Secretary Steven Mnuchin was asked at his confirmation hearing what he thought about using private companies to collect money owed to the government,” The NY Times writes, “he replied that it ‘seems like a very obvious thing to do.'”

Those private companies, though, don’t work for free.

“Private debt collectors cost the Internal Revenue Service $20 million in the last fiscal year,” The Times expose details, “but brought in only $6.7 million in back taxes, the agency’s taxpayer advocate reported Wednesday. That was less than 1 percent of the amount assigned for collection.”

That’s a ridiculous loss, and one that the I.R.S. is now struggling to defend.

The Times goes on to detail the collection arrangements offered to the contractors. Some were paid commissions on money taken in by the I.R.S. itself, money brought in without the help of the private contractors.

The findings are based on the annual report by Nina E. Olson. Olson leads the Taxpayer Advocate Service, an independent office within the I.R.S.

“While Republicans have been the most vocal proponents of privatizing public services,” The Times adds, “congressional Democrats are equally responsible for the I.R.S.’s program. Despite the pointed failure of similar efforts in the past, Congress passed a law in 2015 requiring the I.R.S. to use outside contractors to make a dent in the $138 billion that taxpayers owe the government.”

$138 billion is a significant debt. Yet the contractors are taking the number in the wrong direction.

“The I.R.S. has implemented the program in a manner that causes excessive financial harm to taxpayers and constitutes an end run around taxpayer rights protections,” the report reads.

What’s worse is that many of the collections made by the private contractors, if not most of them, came from American families experiencing hardships. The I.R.S. works with families experiencing hardships and allows them leniency. These families were targeted, though, by the contractors.