What this means is that if you owe taxes to the I.R.S., you will now deal with privately owned agencies rather than the I.R.S. in order to clear up your account. All payments will be made directly to the United States Treasury, not the private collection agency.
The reason given by I.R.S. Officials for the use of private agencies is that the plan that Charles O. Rossotti, a computer systems entrepreneur who was commissioner from 1997 to 2002, proposed had been forestalled by Congress, who declined to authorize it to hire more revenue offers, to do this job.
Collection agencies will keep 22-24 cents on the dollar with the rest, approximately $1.4 billion over 10 years going to the United States Treasury. It is clearly known by the tax commissioner, Mark W. Everson, and the government that this will be much more expensive than internal collections. They are also aware that using private collectors will cause some debtors to owe more money. According to Mr. Al Cleland, a retired I.R.S. tax collector in Minnesota, "We always told people to get current on their taxes first, so they would not have more penalties added, then work on paying off their back taxes." He goes on to say "A private collection agency has no incentive to tell taxpayers that, so people will pay more penalties."
Collectors will be paid form the proceeds of what is collected.
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