Everyone knows that if it costs $2.00 to earn $1.00, it is a no win and costly proposition. Everyone except the IRS!
It began in 2006. The IRS hired three companies to collect outstanding taxes. More government outsourcing, I suppose. But, how long can this last?
Since 2006, the agency has used three companies to go after a $1 billion slice of the nation’s unpaid taxes. Despite aggressive collection tactics, the companies have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program. The debt collectors have pocketed commissions of up to 24 percent.
That’s throwing good money after bad, so to speak. I guess “it’s the principle of the thing.” Sometimes we cannot afford principle, no matter how well intentioned the program is.
Some Democrats have seen the light.
“This program is the hood ornament for incompetence,” said Sen. Byron L. Dorgan (D-N.D.), a leading critic who has introduced a bill to stop the program. The measure has 23 co-sponsors, all but one of them Democrats. “It makes no sense at all to be turning over these tax accounts to private tax collectors that end up costing the taxpayers money.”
And what about those companies who are making more than is being collected?
Three firms were awarded contracts: Pioneer Credit Recovery, based in the western New York district represented by Rep. Thomas M. Reynolds (R), who supported the program and recently announced his retirement; the CBE Group of Waterloo, Iowa, the home state of Sen. Charles E. Grassley (R), who helped create the program; and Linebarger Goggan Blair and Sampson, a law firm based in Texas, home to President Bush.
Pioneer Credit employees have given congressional candidates and political action committees $117,450 since 1995, including $16,250 to Reynolds. CBE Group employees have given $9,372 during that period, including $2,500 to Grassley.
Linebarger Goggan, one of the nation’s largest collection agencies, has extensive government ties. The firm, its employees and their spouses have given PACs and federal candidates in both parties $423,260 since 1995.
The Austin-based firm was dropped from the program last year for reasons that the IRS declined to make public. Its workload was doled out to the two other companies. Mike Vallandingham, a partner at the firm, said Linebarger Goggan met IRS expectations for collection results and “received high marks for regulatory and procedural accuracy, timeliness and professionalism.”
The firm had been under scrutiny since 2002 because of some of its municipal contracts. A partner went to prison in 2002 for conspiring to bribe two San Antonio City Council members. Last year, the city of Mansfield, Tex., ended its contract with Linebarger Goggan after the firm made a $2,000 donation to the mayor a month after he was elected.
First of all, it seems to me spending a dime to make a nickel isn’t wise use of taxpayers’ dollars. And, secondly, well…. once again it looks like the administration and some Republicans are feathering the nests of their cronies.
