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The Efficiency of the IRS's Automated Collection System
By Darrin Mish
The Automated Collection System - what is it? The Automated Collection System (ACS) handles Integrated Data Retrieval System (IDRS) balance due and non-filer cases needing telephone contact for resolution. Simply put, taxpayers who owe the IRS money is a major IRS problem, and the ACS communicates with these taxpayers through its computerized network. To handle the collection of taxes and to let IRS employees to communicate with taxpayers to combat the delinquent taxes IRS issue, the ACS was created in the 1980s. Tax examiners also use the system to review specific cases and issue notices, levies, or liens in order to fix the tax debt. Certain information is stored in the system, which includes taxpayer information on delinquent accounts or returns, and audit information, which includes every step taken in a specific case. Checks for consistency and validity is built in the ACS. It is supported by methods like court records, bank statements, creditors' files, and corporate files. The question remains if the ACS is an effective way to collect taxes. A recent hearing was held by congress to determine if the ACS was better than private means. Privatization is more expensive than ACS, as argued by Nina Olsen, an IRS National Taxpayer Advocate. Private collectors collect up to 24% in commissions, but only bring in net revenues of $11 million while the program costs $12 million every year to run. In comparison, if $7 million were invested into the Automated Collection System, then the revenues could total from $91.8 million to $145 million with no costly commissions. The government spends about $81 million every year by privatizing collection. The IRS says that they can't afford to employ more revenue officers to address debt collection, so it turns to outsourcing. The IRS is now examining the efficiency of the private debt collection method by taking control over specific cases that were turned over to debt collection firms and addressing them in-house. They're planning to compare the outcomes to decide which process is more effective. Colleen Kelley, the president of the National Treasury Employees Union (NTEU), said at the hearing: "There has been no question from the outset that using private companies to collect taxes is far more expensive than having trained, accountable IRS officers perform this work and poses a severe and unnecessary risk to taxpayers' sensitive and personal information." Kelley also emphasizes the fact that IRS officers cost just 40 cents for every $100 debt collected, making them the most cost efficient tax collectors in the United States. There's no need to utilize private debt collection with such a resource. The government can regain revenue from unpaid taxes with the ACS. Private debt collection is costly when compared with the cost effective work done by the IRS officers.
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