Senate Dems split on private debt collection

WASHINGTON — A proposal to make the Internal Revenue Service hire private companies to collect unpaid taxes is dividing Senate Democrats, with some warning it could lead to harassment of low-income people but others saying it would boost tax revenue.

Sen. Charles Schumer, D-N.Y., recently offered up the plan, which might raise an estimated $4.8 billion in new tax revenue over 10 years. Schumer’s state is home to two of four firms that likely would be hired to do IRS collection work.

Co-sponsored by Sen. Pat Roberts, R-Kan., the bipartisan proposal was attached to a broad Senate tax bill meant to renew more than 50 temporary tax breaks, mostly for corporations. By raising new revenue, the proposal would help offset the costs of the tax breaks.

But Maryland Sen. Benjamin Cardin and two other Democrats are trying to remove Schumer’s proposal from the tax-breaks bill.

“Previous attempts at instituting similar private tax-collection programs resulted in net revenue losses and harassment complaints from taxpayers,” a Cardin spokeswoman said yesterday in a statement.

Cardin faces an uphill battle to remove the debt-collection proposal, in part because it has broad support from Republicans, tax lobbyists said.

In a report to lawmakers last week, Nina Olson, who defends taxpayers’ rights as the ombudsman within the IRS, said the Senate’s proposal is a potential “bulls-eye on the backs of lowincome taxpayers.”