IRS Private Debt Collection Initiative Blocked by House Committee

The U.S. House Appropriations Committee voted yesterday to block funding for the IRS? plan to use private debt collectors to go after outstanding taxes.

In a meeting of the full committee, members voted 29-27 in favor of an amendment to the Treasury Department?s appropriations bill that would bar the IRS from using the $54 million approved by Congress in 2004 to begin the collection project. The bill is now being sent to the full House.

Rep. Steve Rothman (D-NJ) wrote and introduced the amendment. He cited recent personal information breaches as the main catalyst for the provision.

“With personal identity theft on the rise, it makes no sense to hand over 2.65 million taxpayer files to private debt collection companies,” Rothman told the Associated Press yesterday.

While the vote poses yet another obstacle in the plan to outsource IRS debt to the private sector, some still feel that the initiative will go ahead as planned.

Rep. Joseph Knollenberg (R-MI) told reporters that the amendment would probably be overturned when the full House debates the Treasury appropriations bill.