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 Health Care Mandate to Be Enforced by IRS 'Bounty Hunters'

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PostSubject: Health Care Mandate to Be Enforced by IRS 'Bounty Hunters'   Sun 28 Mar 2010, 4:22 am

Health Care Mandate to Be
Enforced by IRS 'Bounty Hunters'
Published on 03-23-2010

By Jim Kouri - BLN Contributing Writer
“Of all tyrannies, a tyranny sincerely exercised for the good of its
victims may be the most oppressive. It would be better to live under
robber barons than under omnipotent moral busybodies. The robber baron’s
cruelty may sometimes sleep, his cupidity may at some point be
satiated; but those who torment us for our own good will torment us
without end for they do so with the approval of their own conscience.”
—C.
S. Lewis (1898 - 1963)

The Internal Revenue Service (IRS) will
see its largest expansion since withholding taxes were first enacted
during WWII to enforce the glut of new tax mandates and penalties
included in the Democrats’ latest health care plan, according to Rep.
Kevin Brady (R-TX)

A new analysis by the Joint Economic Committee
and the House Ways & Means Committee minority staff estimates up to
16,500 new IRS personnel will be needed to collect, examine and audit
new tax information mandated on families and small businesses in the
‘reconciliation’ bill being taken up by the U.S. House of
Representatives this weekend, according to Brady.

“When most
people think of health care reform they think of more doctors exams, not
more IRS exams,” says U.S. Congressman Kevin Brady, the top House
Republican on the Joint Economic Committee. “Isn’t the federal
government already intruding enough into our lives? We need thousands of
new doctors and nurses in America, not thousands more IRS agents.”

Scores
of new federal mandates and fifteen different tax increases totaling
$400 billion are imposed under the Democratic House bill. In addition to
more complicated tax returns, families and small businesses will be
forced to reveal further tax information to the IRS, provide proof of
‘government approved’ health care and submit detailed sales information
to comply with new excise taxes.

Scores of new federal mandates
and fifteen different tax increases totaling $400 billion are imposed
under the Democratic House bill. In addition to more complicated tax
returns, families and small businesses will be forced to reveal further
tax information to the IRS, provide proof of ‘government approved’
health care and submit detailed sales information to comply with new
excise taxes.

Unfortunately, according to the Center for American
Progress, the structure of the IRS’ use of private agencies to collect
“debts” encourages abuse. Under the current program, collectors are
awarded as much as 25 cents of every dollar they collect, in addition to
a $100 bonus for every account they close.

The Internal Revenue
Service strategy of paying private debt collectors a 25 percent
commission to collect unpaid tax debt originally met with bipartisan
resistance from Congress. They claimed that the proposal jeopardized the
rights and privacy of American taxpayers. Several organizations voiced
their objections to the IRS proposal and have expressed their strong
support for the consumer protection legislation Rep. Chris Van Hollen
introduced: Citizens for Tax Justice, Consumer Federation of America,
Consumers Union, National Consumer Law Center, National Consumers
League.

The very nature of the program provides incentives for
collectors to push the limits of legality to extract a little more
revenue from their targets. As part of the IRS Restructuring and Reform
Act of 1998, Congress, fearing overly aggressive collection practices,
explicitly prohibited the IRS from compensating its own collectors based
on the amount of money they collect. If Congress believes that
incentive-based pay will cause official IRS collectors to cross the
line, why would they think private collectors would behave any
differently?

Although IRS officials indicated that the purpose of
the limited implementation phase was to assure readiness for full
implementation using up to 12 private collection agencies, the IRS has
not documented how it will identify and use the lessons learned to
ensure that each critical success factor is addressed before expanding
the program even further during the current atmosphere of extraordinary
government spending.

Because program’s success will be affected
by how well IRS makes adjustments, assessing the lessons learned in
limited implementation is critical. Also, IRS has not documented
criteria that it will use to determine whether the limited
implementation performance warrants program expansion.

IRS
officials indicated that they are considering criteria that could
trigger a go/no go decision, such as the amount of penalties collected
from Americans unwilling or unable to purchase health care insurance and
there are some indications of PCAs abusing taxpayers or misusing
taxpayer data.

Paying private debt collectors on a commission
basis is costly and threatens the rights and privacy of the American
taxpayers. Congress must ensure, as this resolution seeks to do, that
federal tax collection functions will not be handed over to private
sector bounty hunters.

Critics of the private collection agency
program say that, compared with private debt collectors, whose bad
apples star in countless horror stories of debtor abuse and
intimidation, the IRS’s customer-service-based approach may start
looking pretty good to taxpayers.

A recent Center for American
Progress report noted that “19% of all complaints received by the
Federal Trade Commission (FTC) in 2005 were related to debt collectors,
up from 10.5% in 1999. The FTC received more complaints about debt
collection in 2005 than about any other industry—66,627, a 560% increase
over the last six years.” The report’s writers claim this will likely
occur with private agencies working on behalf of the IRS.

IRS
officials say they will have a little more than a half year to identify
the lessons learned before incorporating them into the next contract
solicitation, which IRS intends to release in March 2007.

Related
to such decisions on expansion is IRS’s planned comparative study of
using PCAs. That study is to compare using PCAs to investing IRS’s
operating costs into having IRS staff work IRS’s “next best” collection
cases. Under the documented study design, IRS would exclude the fees
paid to PCAs from the costs and subtract those fees from the tax debts
and health care penalties collected by PCAs.

While such a study
might produce useful information, it will not compare the results of
using PCAs with the results IRS could get if given the same amount of
resources, including the fees to be paid to PCAs, to use in what IRS
officials would judge to be the best way to meet tax collection goals.

Adequately
designing and implementing the study is important to ensure
policymakers are aware of the true costs of contracting with PCAs and
know whether PCAs offer the best use of federal funds, while using the
least abusive and intrusive tactics to collect tax money owed.

But
taxpayer advocate Nina Olsen says that collecting tax revenue is the
core job of the IRS, and it should continue to bear that responsibility
while protecting taxpayer rights. IRS employees cost only 3 cents for
every dollar they collect, making them many times more cost-effective
than private collectors.
________
Jim Kouri, Vice-president of the
National Association of Chiefs of Police. Jim writes for many police
and crime magazines including Chief of Police, Police Times, The Narc
Officer, Campus Law Enforcement Journal, and others.
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