IRS Debt Collection Program on Track, But Improvements Needed: Report

The Internal Revenue Service and the collection agencies it has contracted to help recover some $290 billion in outstanding debt are generally following the guidelines created for the private collection program but some specific improvements may be needed, according to a report from the Treasury Inspector General for Tax Administration (TIGTA).

The TIGTA report was compiled and written from the results of an audit the group conducted on the IRS private debt collection program from April 2007 to February 2008.

TIGTA said that while the IRS and the collection agencies “have generally taken actions consistent with the procedures developed for the Program,” three areas were singled out for improvement: the verification of taxpayer identity on collection calls, the handling of complaints and concerns from taxpayers, and increasing the participation level of customer satisfaction surveys after cases are closed.

“Since 2004, TIGTA has released seven reports regarding the Private Debt Collection Program," said J. Russell George, Inspector General, Treasury Inspector General for Tax Administration.  "In general, we found no significant problems, but there continues to be challenges and questions.  Due to the sensitive nature of the information the [collection agencies] handle, continued monitoring and close coordination with the IRS is necessary."

Authenticating taxpayer identification has been a concern for the two collection agencies on the contract, according to Jeff Trinca, who lobbies Congress on behalf of the firms – CBE Group and Pioneer Credit Recovery. “There is anxiety when it comes to authentication,” he said.

Trinca noted that due to the accounts receivable management industry’s third party contact issues, collectors are anxious when trying to properly identify if the person on the line is indeed the right party. Often, collectors will ask for a partial Social Security Number to identify.

“We’re trying to figure out less stressful ways to authenticate, rather than by Social Security Number,” said Trinca.

The collection agencies have also been having a hard time getting taxpayers to participate in a customer satisfaction survey once their cases have been handled.

The National Treasury Employees Union, a group that has long opposed the IRS private debt collection initiative, noted Friday that the IRS generates participation rates on its customer between 40 and 42 percent. The participation rate for the private collectors’ customers is 14 percent.

The NTEU said that, according to the report, the surveys are flawed because ““the survey selection process detracts from the credibility of the survey results. This occurs because the contractors’ representatives who conduct the collection calls are also responsible for offering the survey, which allows the potential for discretion or discouragement in the selection process (i.e., biased results).”

TIGTA said that the IRS responded to its report, dated September 10, by improving its authentication process and “revised the taxpayer satisfaction survey methodology and the quality analyst review to include whether the contract representatives solicit the survey in an unbiased manner,” among other steps.

The ultimate fate of the IRS private debt collection program is still “in limbo,” according to Trinca. The current contract for CBE and Pioneer runs through March 2009, at which time it will be up for renewal. Trinca said that whoever is elected President will have the final say on the program and that the initiative may depend on which candidate wins the election.