The Automated Collection System of the IRS – Effective?
The Automated Collection System – what is it? The Automated Collection System (ACS) controls Integrated Data Retrieval System (IDRS) balance due and non-filer cases requiring telephone communication for resolution. Simply put, taxpayers who owe the IRS money is a major IRS problem, and the ACS contacts these taxpayers via its computerized network.
ACS was created in the 1980s to combat a huge IRS problem of delinquent taxes and let IRS employees to communicate with taxpayers via phone and/or mail and to handle the collection of taxes. In order to resolve the tax debt, notices, liens, or levies are issued and particular cases are examined by tax examiners through this system. Certain data is saved in the system, which includes taxpayer information pertaining to delinquent accounts or returns, and audit information, which includes each step made in a certain case.
Every piece of information that’s uploaded to the ACS is verified by other means, like bank statements, corporate files, court records, and by contacting creditors. Checks for validity and consistency are integrated into the system.
Is utilizing the Automated Collection System effective in collecting taxes owed? Recently, a congressional hearing was held to determine if ACS or privatization was the most efficient and effective method of collecting taxes.
Privatization is more expensive than ACS, as emphasized by Nina Olsen, an IRS National Taxpayer Advocate. Private collectors collect up to 24% in commissions, but just bring in net revenues of $11 million while the program costs $12 million every year to use.
Revenues could total up to $91.8 million to $145 million by utilizing the ACS, with no costly commissions and an investment of only $7 million. The government spends about $81 million every year by privatizing collection.
The IRS reasons that it cannot afford to employ more employees for debt collection, that is why it outsources. They are, though, regaining control of a few cases from private collectors and handling them in-house to decide which method is more effective.
Colleen Kelley, the president of the National Treasury Employees Union (NTEU), testified at the hearing: “There has been no question from the outset that using private companies to collect taxes is far more expensive than having trained, accountable IRS employees perform this work and poses a severe and unnecessary risk to taxpayers’ sensitive and personal information.”
In her opposition to privatize collection of federal taxes, Kelley also points to the fact that IRS officers are some of the most efficient tax collectors in the US. For example, a debt of $100 collected by IRS employees only costs 40 cents. Despite a big drop in the number of IRS officers, this is a 2 cent drop from 2007. Ms. Kelley states, “The IRS runs one of the most cost-efficient tax collection systems in the world, yet this administration insists on forging ahead with its costly privatization scheme in spite of dismal financial results and ever-growing opposition.”
Utilizing the ACS is more cost effective, compared to private debt collection. With the work of IRS officers, the government has the opportunity to recoup revenues.
Filed under Blog by on Oct 2nd, 2009. 
