Tax News

CCH (cch.taxgroup.com) reports:

  IRS Commissioner Douglas H. Shulman said on July 18 that he is studying the Service's controversial private collection initiative but declined to predict the future of the program. Shulman added that the IRS is ready to help lawmakers understand if the policy goals of proposed tax legislation are administrable. Shulman spoke in Washington, D.C., at a special event to mark the 10th anniversary of the IRS Restructuring and Reform Act of 1998 (P.L. 105-206) (RRA '98).

Outsourcing Tax Collection

  Two private collection agencies, The CBE Group of Waterloo, Iowa, and Pioneer Recovery Credit of Arcade, N.Y., are currently working taxpayer accounts. According to the Tax Fairness Coalition, the private collection agencies have recovered roughly $60 million since September 2006 (TAXDAY, 2008/06/30, M.1).

  At his confirmation hearing earlier this year, Sen. Charles E. Grassley, R-Iowa, ranking member of the Senate Finance Committee, asked Shulman to commit to full implementation of the private collection initiative (TAXDAY, 2008/01/30, C.2). Shulman told Grassley that he would look at the program.

  When asked on July 18 about the future of the initiative, Shulman said that he is "studying the issue of private tax collection." Shulman added that he is not ready "to give an opinion (about the initiative) at this time."

  Opponents and supporters of private tax collection have been much more vocal. "It's a waste of taxpayers' money. IRS employees could collect more money for less," Colleen M. Kelley, president of the National Treasury Employees Union (NTEU), which represents IRS employees, said earlier this year (TAXDAY, 2008/02/01, T.1). "At a time when uncollected tax debt at the IRS is at a 10 year high, we cannot afford to let billions of dollars simply fall off the books at the expense of taxpayers. The program continues to bring in millions in uncollected tax debt to help close the tax gap," a spokesperson for the Tax Fairness Coalition, told CCH.

  In June, the House Appropriations Committee voted to terminate the initiative (TAXDAY, 2008/06/30, C.1). Similar legislation is pending in the Senate.

Tax Legislation

  "The legislation (RRA '98) proposed that the IRS have a seat at the table as tax legislation is drafted to offer its view on whether the legislation is administrable," Shulman explained. He noted that the IRS currently provides a complexity analysis of proposed legislation upon request by the Joint Committee on Taxation. "I think there is more we could and should do to ensure that the policy goals of legislation are administrable."

Ten Years

  Looking back on the 10 years since passage of RRA '98, Shulman said that the Service has made great progress in improving customer service and enforcement. "One of the clear mandates of the Act was for IRS to dramatically improve service to taxpayers. No one can argue that this was not the right thing to do."

  Before Congress passed RRA '98, service at the IRS had fallen to "unacceptable levels," Shulman said. Taxpayers could not reach the IRS for help and when they did, they often received incorrect information, he added. Over the past 10 years, the IRS has shown "dramatic" improvement in customer service.

  Enforcement has also improved. Shulman acknowledged that enforcement fell to record lows in the years immediately after passage of RRA '98. Shulman's immediate predecessor, Mark W. Everson, refocused the agency on enforcement.

  The IRS' reorganization into customer segments has also helped enforcement, Shulman observed. "I believe the recent success the IRS has had in combating abusive shelters was, in no small part, attributable to the existence of the Large and Mid-Size Business (LMS Division." Before RRA '98, "the responsibility for dealing with tax shelter abuses would have been the responsibility of the examination function, which was to some degree independently managed in each region and district office and had responsibility for all examination activity." LMSB, Shulman said, is "able to bring the focus and expertise necessary to address the issues."

Workforce Issues

  Finally, Shulman said that the IRS must focus on recruitment and retention of talented employees (TAXDAY, 2008/07/11, I.2). "We have a lot of people at the IRS who could leave and make double or triple their salary." Many employees stay with the agency because of their commitment to public service, he added.

  By George L. Yaksick, Jr., CCH News Staff

IR-2008-90

Other References:

 
Code Sec. 6306

  CCH Reference - 2008FED ¶38,084E.01

 
Code Sec. 7804

  CCH Reference - 2008FED ¶43,266.01

  Tax Research Consultant

  CCH Reference - TRC IRS: 3,000

  CCH Reference - TRC IRS: 3,058