This is a first! The IRS has started using private companies to collect overdue taxes. If the program is successful, it will be expanded next year.
The IRS claims the “tax gap” has grown to $290 billion. The tax gap is the difference between taxes collected versus taxes the IRS believes SHOULD be collected.
Three private companies are expected to collect about $1.4 billion. The cases assigned to them are ones in which the tax bills are not in dispute, but are merely unpaid. The firms will not be allowed to take enforcement actions such as liens, levies, or seizures, and they won’t be able to cut deals to settle the outstanding debts.
The IRS is using the firms so that IRS personnel will be free to pursue more difficult cases. The authority to hire outside firms was granted to the IRS in 2004, but unions slowed the implementation.