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(DV) Rajiva: Tax Hunters LTD -- Hired Duns Take Over Your Taxes







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

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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, that’s 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?

What’s 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, they’ve 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 that’s 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 it’s 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 couldn’t 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, it’s back.

But, of course, they’re 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, don’t expect mercy.

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

How’s 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: lrajiva@hotmail.com. Copyright (c) 2006 by Lila Rajiva


1. Jeff Schnepper, "Should the IRS hire private tax collectors?" MSN Money, 2003.

2. Christopher Lee, "IRS Laptop Lost With Data on 291 People," Washington Post, June 8, 2006.

3. David Johnston, "I.R.S. Enlists Outside Help in Collecting Delinquent Taxes, Despite the Higher Costs," New York Times, August 20, 2006, p. 12.

4. Kevin McCoy, "IRS plan to use private tax collectors runs into snags," USA Today, May 4, 2006.

5. Liz Pulliam Weston, "The tax man and the debt collector team up," MSN Money. See also, Weston, "Sleazy new debt-collector tactics," MSN Money.

Other Articles by Lila Rajiva

* Golden Goose Down: Was the IMF Involved in Gold Price Manipulation?
* Hanky Panky at the Counting House
* Kartoon-Krieg: Politics as War by Other Means
* Double Standards on Foreign Owners: Amdocs vs. DP World
* Port-Folly-O: Outsourcing Our Own Security?
* The Torture Photos Congress Didn’t Want Us to See
* Axis of Child Abusers: British Troops Beat Up Barefoot Iraqi Teens
* Fictionalizing the New World Order: A Review of Andre Vltchek’s Point of No Return
* How America Kills Iraqi Journalists for Their Own Good
* Two Moms on Capitol Hill
* Operation Romeo: Lessons on Terror Laws from “Injun” Country
* Begging for the Brownshirts
* A Short History of RADIO FREE IRAQ
* What Did European Agencies Know About the Torture Flights?
* The Torture-Go-Round: The CIA’s Illegal Rendition Flights
* The Gratitude of Turkeys
* Rodent Trials Show Biotech is Squeaky Unclean
* Willie Pete and the Theo-logicians of Empire
* Dover Bitch
* Economics Trumps Law in the Neoliberal Gulag
* Coming Out On Hallowe'en
* How to Recognize a Liberal Feminist
* License to Bill: In India, Bill Gates Does Well by Doing Good
* The Burgh, Downsizing
* Preview of Abu Ghraib in New Orleans
* Leviathan in the Flood: Katrina and the Fishy Logic of the State
* The NPT is Dead.... And It's a Good Thing Too
* An 800-Pound Gorilla Goes to the UN
: John Bolton's New Internationalism
* Vision Mumbai Submerged: Water, Water, Everywhere, Nor Any Drop to Drink
* America's Downing Syndrome, or Why the Not-So-Secret Air War Stayed “Secret”
* Turkey Supreme
* Witches and Bastards: An Imperial Wizard and a Prescription for Anti-Imperialism
* Playing Monopoly in Charm City
* The Pharisee’s Fire Sermon
* The Ideology of American Empire
* Tsunami Cover Up? NOAA and the Flood
* Iraqi Women and Torture, Part IV: Gendered Propaganda, the Propaganda of Gender
* Iraqi Women and Torture, Part III: Violence and Virtual Violence
* Iraqi Women and Torture, Part II: Theater That Educates, News That Propagandizes
* Iraqi Women and Torture, Part I: Rapes and Rumors of Rape
* Nicholas Kristof's Fox Pas(s)
* Putting Conservatives on the Couch: Transactional Analysis and the Torture Apologists
* The New Post-Colonial Racism
* Eyeless in Iraq: The L.A. Times and the Fog of War