Recent Numbers Show Private Debt Collection Inefficient
In the 10 days prior to the hiring of a private debt collection agency in April of 2017 to collect certain debt, the IRS sent letters to the debtors notifying them that their cases would be transferred to the private agency. In response, the IRS received $464,000 from debtors for their overdue taxes.
Since the IRS began outsourcing, the private agency has collected approximately $945,000 of the $407 million overdue taxes they were assigned to collect. However, of the amount collected on 50% actual goes to the public treasury after the private agencies receive 25% for their commission and the IRS takes 25% for their fees and interest. This equates to almost the same amount the IRS collected simply by sending a letter.