Prisons for profit, spooks-for-hire, pay-as-you-drink-water -- it was
only a matter of time before the privatizing mania reached the Internal Revenue
Service. Now, under the American Jobs Creation Act of October 2004, the government
is getting ready to pay bounty hunters up to one-quarter of the money they collect
in delinquent taxes.
And this IRS blockbuster is coming to a town near you this September with minimal
public preview. In two weeks time, the records of 12,500 taxpayers, that’s
right, YOUR sensitive tax papers, are going to be pawed through for leisure
reading by profiteers who get to pocket a sizable wad of cash for collecting
delinquencies on them. What are the odds that the definition of delinquency
is going to expand faster than a neo-con war plan?
What’s more, with tortured logic, the program will actually cost the
government more than hiring extra agents. Eight times more, to be precise. But
never mind that piddling little detail. You see, they’ve already got the
funds for it . . . set aside as far back as 2004 with a Delphic foresight singularly
absent elsewhere in Federal budgeting.
The lucky winners, picked out of 33 bidders in March, are CBE Group Inc., in
Waterloo, Iowa, Linebarger Goggan Blair & Sampson LLP in Austin, Texas,
and Pioneer Credit Recovery Inc., in Arcade, N.Y. But that’s only a humble
start. In ten years, there are going to be ten companies tasked with pulling
in $1.4 billion --- of which their cut is a good bit over 300 million bucks.
Think that might whet their palates a bit? A Linebarger partner has already
pleaded guilty to bribery to win a prior contract. And it’s not the only
collection group with problems. GC Services, the firm that challenged the Linebarger
award, had a contract suspended in 2004 after internal documents were found
in a trash container outside the company's Columbus office.
Meanwhile, hiring a few more regular IRS agents would actually get the job
done for about 3% rather than 25%. That means $290 million can actually collect
$9.5 billion in one year rather than half a billion collecting $1.4 billion
in ten. The IRS’ rotten math works for no one except debt mercenaries.
Of course, tax farming has been around for a long time . . . in fact, as far
back as the Egyptians. And real estate tax collection and taxes in some states
are also handled by private collectors. But if you think the feds’ wholesale
adoption of a bad idea is nothing to worry about, consider what it does to the
already tottering foundations of citizens’ privacy. Think about cases
like the one in May 2006, when thieves broke into a Veteran Affairs data analyst's
home and stole a laptop and hard drive containing the personal information of
26.5 million veterans and active-duty military members. Note that under the
new law, the IRS will be exempt from liability for the actions of the private
collection agencies. With soaring identity theft, Patriot Acts, concocted terrorist
scares, and ever-burgeoning government surveillance and forfeiture powers, think
about the potential for abuse.
Think about the record of abuse.
According to attorneys of the National Consumer Law Center, student loan collection
by private collectors employed by the Department of Education "charged
excessively high collection fees, coerced consumers into payment plans they
couldn’t afford, threatened to seize disability payments and other assets
protected by law, and lied by pretending to be Department of Education employees."
And the Federal Trade Commission, which also used private collectors, found
that nearly 80% of the money collected by its private goon squad, Capital Acquisitions
and Management, came "from consumers who never owed the original debt in
the first place." but paid up to stop being harassed.
What kind of harassment? Repeated calls, illegal threats of wage garnishing
and imprisonment and obscene language.
Think about the inefficiency. California has handed over more than $2 billion
in bad tax debt to private companies in the past 17 years -- and has recovered
only $50 million, or less than 3%.
And when the IRS did a dry run in 1996-7, the Clinton administration itself
thought the paltry results, aggressive tactics and undermining of privacy and
security was not worth the effort and abandoned the idea.
Now, it’s back.
But, of course, they’re going after all those deadbeats stealing
tax-candy from poor little Uncle Sam, right?
Right . . . but only if the candy is worth less than $25,000.
Which, I guess, is not the kind of tax problem that corpulent corporate (and
non-corporate) felines of various stripes are sweating over in their sleep.
Meanwhile, in its all too scrutable wisdom, the agency is also simultaneously
laying off 157 auditors who check estate and gift tax returns. Not needed, it
says, since so much of the estate tax has been repealed anyway. But the axed
auditors claim the lay-offs are really meant to weaken and then entirely crush
the estate tax . . . except for those who are rich enough...or long-lived enough
. . . to afford legal swaddling thick enough to hide their bundles of joy from
That means, if you are a multimillionaire who can punch back, the IRS will
roll over and cry uncle, but if you happen to be, say, an overworked office
gopher, a widow with three children, or a disabled construction worker, don’t
Meanwhile, millions worth of taxes on billionaires' offshore tax shelters
How’s that for equal justice before the law?
For those still unable to read the handwriting on the wall, here it
is in bold type:
The looting of middle America rolls on.
1. Jeff Schnepper, "Should the IRS hire private tax collectors?"
MSN Money, 2003.
2. Christopher Lee, "IRS Laptop Lost With Data on 291
People," Washington Post, June 8, 2006.
3. David Johnston, "I.R.S. Enlists Outside Help in Collecting
Delinquent Taxes, Despite the Higher Costs," New York Times, August 20,
2006, p. 12.
4. Kevin McCoy, "IRS plan to use private tax collectors
runs into snags," USA Today, May 4, 2006.
5. Liz Pulliam Weston, "The tax man and the debt collector
team up," MSN Money. See also, Weston, "Sleazy new debt-collector
tactics," MSN Money
Lila Rajiva is a freelance writer in Argentina, and the author
of the must-read book, The
Language of Empire: Abu Ghraib and the US Media (Monthly Review Press, 2005).
She can be reached at: email@example.com.
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