Tag Archives: Taxes

Government Contractor Tax Day Tidbits – “Food for Thought”


tax day


[On] the federal tax filing deadline, the Project On Government Oversight (POGO) offer[ed] some tax-related contractor oversight food for thought:

  • ” The Treasury Inspector General for Tax Administration (TIGTA) found that the Internal Revenue Service (IRS) awarded contracts to at least 20 companies that owed more than $5 million in delinquent federal taxes. TIGTA also found that 11 contractors owing $4.3 million in taxes were awarded more than $356 million in IRS contracts and an additional $3.7 billion in contracts from other federal agencies
  • POGO tracks tax violations in our Federal Contractor Misconduct Database, which shows that contractors have paid $3.64 billion to resolve cases with local, federal, and foreign revenue collection authorities. The bulk of this amount comes from GlaxoSmithKline’s record-breaking $3.4 billion payment in 2006 to settle IRS charges of under-reporting profits.
  • There are some noteworthy tax misconduct cases pending against the large federal contractors, including actions by New York City and State against FedEx and United Parcel Service for allegedly trafficking in contraband cigarettes, and a complaint filed with the IRS accusing ExxonMobil of violating tax laws to wage a campaign attacking climate science.
  • Earlier this month, the IRS launched a program employing private debt collection companies to recover delinquent income taxes. This is the third time since 1996 the IRS has tried to outsource tax debt collection—both previous attempts were dismal failures.
  • Congress has taken another stab at passing a law that would prevent individuals with seriously delinquent tax debts from obtaining federal employment, contracts, and grants. Similar bills introduced in 2011, 2013, and 2015 ultimately failed to advance. The Senate is also attempting to strengthen protections for those who blow the whistle on tax fraud.

So get those tax returns out the door! You can rest assured that POGO will do its best to make sure the government collects what it is owed and does not waste that money.”






IRS Gears Up for 3rd Try at Outsourced Tax Collection




“This week, the IRS unveiled its plan to outsource federal tax debt collection to the private sector.

It will be the third time in 20 years the IRS employs private debt collection companies to recover delinquent federal income taxes, which currently amount to $458 billion.

The IRS’s previous experiments with private debt collection, in 1996 and 2006, were resounding failures. Both times, program costs offset the amount of revenue collected, and taxpayers complained of abusive and underhanded tactics by the collection companies. Government tax collectors have one critical advantage over private collectors: discretion. IRS agents can exercise discretion and flexibility when working with delinquent taxpayers, while contractor collectors can only demand payment.

Nonetheless, Congress is still gung-ho on the idea. It passed a highway funding billlast year which included a provision requiring the IRS to turn over some unpaid tax accounts to private collectors.

The program is expected to go into effect in the spring of 2017, at the earliest. The IRS awarded contracts to four companies: CBE Group, ConServe (aka Continental Service Group), Performant Recovery, and Pioneer Credit Recovery.

The fact that two of the contractors—CBE and Pioneer—took part in the ill-fated 2006 program does not bode well for this latest attempt. Pioneer’s recent track record, in particular, does not inspire confidence.

Earlier this year, Pioneer and another debt collection company paid $575,000 to settle alleged violations of the Electronic Fund Transfer Act and the Fair Debt Collection Practices Act. Last year, the Department of Education terminated contracts with Pioneer and four other companies after finding they made “materially inaccurate representations” to federal student loan borrowers.

Pioneer reportedly drew the most borrower complaints to federal regulators. A 2012 Bloomberg exposé of the student loan collection industry singled out Pioneer for its coercive and deceptive collection practices.

Another cause for concern is that the tax collection program comes amid a recent surge in phone scams in which callers impersonate IRS agents and swindle victims into paying fictitious tax debts. The agency’s promise to “do everything it can” to mitigate this danger, including notifying taxpayers that their account is being transferred to a private collection agency, seems unconvincing.

Will the third time be the charm for private tax debt collection?