So, it’s pretty much obvious that there is a lot of potential for abuse, and since these firms are not well known outside of the industry, there is a lot of potential for fraud.
But, my dear, what is the situation now?
[bctt tweet=”The IRS is defrauded every day, and the scams morph and modulate with each breath we take.” via=”no”]
So, how will that get any worse as the revenoor’s get to work?
According to Senator Warren, revenoor’s will suggest to taxpayers that they can get bank loans or credit card cash advances to settle their debt, or even (gasp) borrow against their 401-K!
Now Dear Hearts, I ask you, what will a typical IRS Agent do? Is it possible that if the situation gets dire enough they might possibly suggest to a delinquent taxpayer that they explore all their options for raising the money to pay their tax bill?
Of course they will, silly. Of course they will.
The big question here is what is the most productive method of collection, private collectors, or salaried agents? Which investment has the highest ROI in terms of new tax dollars collected for dollar of expense.
From an outsider’s point of view, it appears that the money would be better spent on salaries in the collection division. Staff has the same tools available as contractors, maybe a few more enforcement tools, and at the same time are probably a lot more impartial.
Sure, a quarterly bonus based on cases closed is a big incentive to a salaried Federal employee, but think about the overall cost.
The IRS has a sunk cost in systems and procedures, the revenoor’s have to develop new systems and learn new procedures, very much differrent from the systems and procedures they use for collection of consumer debt.
It’s a different ball game.
And, it needs to be put back on its own pitch.
Senator Warren’s arguments are full of hooey, but I agree with her goal. Get rid of the collection agencies and expand to the collection division.
My guess is that it was a fiscally conservative bunch of nitwits who thought that cutting back on the one governmental agency that actually collects money rather than just spending it would not have any effect, and then when it did, that by going off the books with freelancers they could hide the fact that it was costing more to collect past due bills than an internal collection system would cost.
In common language, the conservative philosophy on this game board was penny wise and pound foolish.
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