Fact: The I.R.S. Pays Sick Money To Collection Agencies That Aren't Worth a Damn.
Happy New Year, friends. April 17th will be here before you know it, just a friendly reminder to think more about your taxes. Something we all find very serene, thinking about taxes.
Until then, here's a fun fact: The IRS makes really lousy decisions, especially when it comes to their finances. The irony herin is worthy of a nervous maniacal laugh whilst slashing one's very own tires. Check it out...
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, he replied that it “seems like a very obvious thing to do.”
It may have been obvious, but it made absolutely no sense economically. Down-right stupid actually.
Private debt collectors cost the Internal Revenue Service $20 million in the last fiscal year, 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. Think about that for a second.
What’s more, private contractors in some cases were paid 25 percent commissions on collections that the I.R.S. made without their help, according to the annual report by Nina E. Olson, who heads the Taxpayer Advocate Service, an independent office within the I.R.S. That's like tipping 62% to a McDonalds drive-thru attendant for a Happy Meal with stale french fries. Or something like that.
While Republicans have been the most vocal proponents of privatizing public services, 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.
If you receive a call from a private collection agency, ask them if they were aware that they are being seriously overrated.