The United States House of Representatives has voted 238 to 179 to kill an Internal Revenue Service program that relies on private debt collectors to pursue taxpayers for back taxes.
Congressmen voted to scuttle the two year-old effort, which has the IRS on track to lose more than $37 million as it pays contractors to do what the government's own tax experts say IRS agents could do more efficiently. Despite aggressive collection tactics, the contractors have brought in only $49 million in revenue, little more than half of what it has cost the IRS to implement the program.
"This program violates the public trust and must end;” Rep. John Lewis, a chief sponsor of the bill, said in a statement.
Similar legislation has passed the House before. The real battle will be in the Senate, where one of the programs staunchest defenders, Charles Grassley, is on the Senate Finance Committee which must approve the bill.
Grassley's state, Iowa, is home to one of the two private debt collectors still used by the IRS. He has said that over time, the program can help narrow the $345 billion "tax gap" the gulf between what taxpayers owe and what the IRS collects.
Detractors claim the IRS would be more effective than private companies. Senator Grassley has written a letter to Senator Byron Dorgan, who has introduced a bill to stop the program, stating "The IRS has no interest and no will to pursue these debts:”