Making the IRS look good

It's always fun to see ideology trump sanity and common sense, especially when it isn't one's own country on the hook for the bill. For today's example, look no further than the interaction between the IRS and the U.S. Congress:

The government began this month to accept bids from debt-collection agencies that it hopes to begin using as early as next summer to go after billions of dollars in unpaid taxes...

The government decided to turn to the private sector when it became clear that Congress was unlikely to increase the agency's budget to allow it to hire enough workers to go after all the outstanding debts...

And it turns out the government is due a lot. According to the GAO report, Americans owed $120 billion in collectible taxes, including interest and penalties, in 2003. That was up from $112 billion the year before...

"These are cases that the IRS doesn't have the resources to get to right now in terms of staffing or funding. It's basically uncollected tax revenue just sitting out there that the IRS cannot get to," Lipold said.

In soliciting bids, the IRS said private collectors would earn from 21% to 24% of what is collected, depending on the size of the debt.

In sum: Congress is utterly unwilling to provide the necessary resources to allow the IRS to collect the amounts owing on its own. Instead, the IRS will outsource the job to the private sector. As a result, the IRS will lose a quarter of the value of the initial debt...which it could have collected in full if Congress was willing to fund the IRS in achieving the task.

Incidentally, lest anybody think this is an entirely new idea:

Use of the private sector is a major turn for the IRS, which tried the strategy a decade ago and abandoned it for lack of revenue. The idea was resurrected as the size of the agency began to shrink and the debt to mount.

Somewhere, Grover Norquist is smiling. But American taxpayers who'll now be paying Congress-approved firms to do the job that the IRS used to do for itself should be doing something else entirely.