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Tuesday, March 27, 2007
Rangel To Push Privatization Repeal
Good news on the IRS privatization front- Chairman of the House Ways and Means Committee Charles Rangel (D-NY) has stated his intention to repeal the IRS privatization program and in the meantime has asked that IRS not issue any more contracts to private debt collectors.
Rep. Rangel's interest is most likely in moving forward with H.R. 695, a bill co-sponsored by Reps. Chris Van Hollen (D-MD) and Steve Rothman (D-NJ) with bipartisan support that would end the privatization program once and for all. Again, this is great news, and we hope that Rep. Rangel moves forward on this issue soon.
Rep. Rangel said his immediate concerns over the program stem from a suspicious refusal by the IRS not to renew one of the debt collector's contracts. The contractor -Linebarger Goggan Blair & Sampson- is a debt collector based in Texas that has had its employees convicted of bribing public officials and is being sued for doing the same now, as the New York Times reported last August.
But problems with these contractors don't end there. One of other three companies awarded contracts -Pioneer Credit Recovery, Inc.- just so happens to be based in the district of Rep. Tom Reynolds (R-NY), as confirmed by FedSpending.Org data. Rep. Reynolds is the author of the bill language that established the program in the 2004 Job Creation Act.
Pioneer's CEO also happens to be a major donor to the Republican Party and Rep. Reynolds' campaigns. See this Unbossed post for details.
Now, this program is not an earmark- Congress did not pass a bill that directed these contracts to particular companies. IRS ran a competition over which company got the contracts. So one would assume that Pioneer and Linebarger won the contracts fair and square.
But the competition was fishy, too. IRS set the compensation rates at 21 to 24 percent of the backtaxes the companies brought in- an incredibly high number, given that IRS employees could do the same work for 3 cents for every collected tax dollar. IRS to my knowledge has not explained why it did not put these terms up for competition.
Some of the companies that competed for the contract filed complaints with GAO that the competition wasn't fair. GAO also issued a report that found that IRS proceeded with the program hastily, failing to first set up a way to correct errors in program management or evaluate its cost-effectiveness. You'd think IRS would pay special attention to managing this program, because a similar program in 1996 was found to have cost more money than it brought in and involved contractors who harrassed and abused taxpayers.
Despite all these realized and potential problems with the program, IRS keeps charging ahead, with the blessing of the Bush administration and many senior congressional Republicans. It's a welcome sign that Rep. Rangel intends to stop this program by pushing through the bipartisan-supported H.R. 695.
Posted by Matt Lewis
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