Tax Hunters LTD: Hired Duns Take Over Your Taxes
by Lila Rajiva
September 7, 2006

Prisons for profit, spooks-for-hire, pay-as-you-drink-water -- it was only a matter of time before the privatizing mania reached the Internal Revenue Service. Now, under the American Jobs Creation Act of October 2004, the government is getting ready to pay bounty hunters up to one-quarter of the money they collect in delinquent taxes.

And this IRS blockbuster is coming to a town near you this September with minimal public preview. In two weeks time, the records of 12,500 taxpayers, thats right, YOUR sensitive tax papers, are going to be pawed through for leisure reading by profiteers who get to pocket a sizable wad of cash for collecting delinquencies on them. What are the odds that the definition of delinquency is going to expand faster than a neo-con war plan?

Whats more, with tortured logic, the program will actually cost the government more than hiring extra agents. Eight times more, to be precise. But never mind that piddling little detail. You see, theyve already got the funds for it . . . set aside as far back as 2004 with a Delphic foresight singularly absent elsewhere in Federal budgeting.

The lucky winners, picked out of 33 bidders in March, are CBE Group Inc., in Waterloo, Iowa, Linebarger Goggan Blair & Sampson LLP in Austin, Texas, and Pioneer Credit Recovery Inc., in Arcade, N.Y. But thats only a humble start. In ten years, there are going to be ten companies tasked with pulling in $1.4 billion --- of which their cut is a good bit over 300 million bucks. Think that might whet their palates a bit? A Linebarger partner has already pleaded guilty to bribery to win a prior contract. And its not the only collection group with problems. GC Services, the firm that challenged the Linebarger award, had a contract suspended in 2004 after internal documents were found in a trash container outside the company's Columbus office.

Meanwhile, hiring a few more regular IRS agents would actually get the job done for about 3% rather than 25%. That means $290 million can actually collect $9.5 billion in one year rather than half a billion collecting $1.4 billion in ten. The IRS rotten math works for no one except debt mercenaries.

Of course, tax farming has been around for a long time . . . in fact, as far back as the Egyptians. And real estate tax collection and taxes in some states are also handled by private collectors. But if you think the feds wholesale adoption of a bad idea is nothing to worry about, consider what it does to the already tottering foundations of citizens privacy. Think about cases like the one in May 2006, when thieves broke into a Veteran Affairs data analyst's home and stole a laptop and hard drive containing the personal information of 26.5 million veterans and active-duty military members. Note that under the new law, the IRS will be exempt from liability for the actions of the private collection agencies. With soaring identity theft, Patriot Acts, concocted terrorist scares, and ever-burgeoning government surveillance and forfeiture powers, think about the potential for abuse.

Think about the record of abuse.

According to attorneys of the National Consumer Law Center, student loan collection by private collectors employed by the Department of Education "charged excessively high collection fees, coerced consumers into payment plans they couldnt afford, threatened to seize disability payments and other assets protected by law, and lied by pretending to be Department of Education employees."

And the Federal Trade Commission, which also used private collectors, found that nearly 80% of the money collected by its private goon squad, Capital Acquisitions and Management, came "from consumers who never owed the original debt in the first place." but paid up to stop being harassed.

What kind of harassment? Repeated calls, illegal threats of wage garnishing and imprisonment and obscene language.

Think about the inefficiency. California has handed over more than $2 billion in bad tax debt to private companies in the past 17 years -- and has recovered only $50 million, or less than 3%.

And when the IRS did a dry run in 1996-7, the Clinton administration itself thought the paltry results, aggressive tactics and undermining of privacy and security was not worth the effort and abandoned the idea.

Now, its back.

But, of course, theyre going after all those deadbeats stealing tax-candy from poor little Uncle Sam, right?

Right . . . but only if the candy is worth less than $25,000.

Which, I guess, is not the kind of tax problem that corpulent corporate (and non-corporate) felines of various stripes are sweating over in their sleep.

Meanwhile, in its all too scrutable wisdom, the agency is also simultaneously laying off 157 auditors who check estate and gift tax returns. Not needed, it says, since so much of the estate tax has been repealed anyway. But the axed auditors claim the lay-offs are really meant to weaken and then entirely crush the estate tax . . . except for those who are rich enough...or long-lived enough . . . to afford legal swaddling thick enough to hide their bundles of joy from the Feds.

That means, if you are a multimillionaire who can punch back, the IRS will roll over and cry uncle, but if you happen to be, say, an overworked office gopher, a widow with three children, or a disabled construction worker, dont expect mercy.

Meanwhile, millions worth of taxes on billionaires' offshore tax shelters go uncollected

Hows that for equal justice before the law?

For those still unable to read the handwriting on the wall, here it is in bold type:

The looting of middle America rolls on.

Lila Rajiva is a freelance writer in Argentina, and the author of the must-read book, The Language of Empire: Abu Ghraib and the US Media (Monthly Review Press, 2005). She can be reached at: [email protected]. Copyright (c) 2006 by Lila Rajiva