Private companies contracted by the Internal Revenue Service are leaving taxpayers vulnerable to scams and exploitative practices, being trusted to self-report complaints and bringing in just a small fraction of the debt they are assigned to collect, according to a scathing new report from the agency’s inspector general.
While an earlier report from the National Taxpayer Advocate’s office found the program had cost more than the private debt collection firms had brought in, the Treasury Inspector General for Tax Administration's data showed a small net profit of $1.3 million as of May 2018. The privatization is the third such effort IRS has administered since 1995, with previous iterations quickly canceled due to poor management and negative returns.