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IOWA COLLECTION AGENCY AT CENTER OF PRIVATE COLLECTION DISPUTE

May 24, 2007

Waterloo-based collection agency CBE was in the spotlight yesterday in Congressional hearings on the use of private debt collectors to collect tax debts. The private debt collection program is a bit of a political football, supported by Republican members and opposed by committee Democrats, the Taxpayer Advocate's Office and the National Treasury Employee Union (NTEU).

The Taxpayer Advocate opposes private collection on privacy grounds and because they say the government could better use its resources elsewhere. It's funny: just a few years after congresscritters beat up the IRS for rough treatment of taxpayers, suddenly the IRS is the gold standard of customer service and privacy protection.

The committee released transcripts of tax collection calls made by CBE. If the transcript release was designed to make the private collectors look bad, they fall short. They really highlight how the private collectors have to work under ridiculous restrictions. For example, they can't even tell someone over the phone that they are calling to collect taxes until they verify social security numbers - something people are wisely reluctant to do with strangers over the phone. That leads to this sort of circular conversation:

Taxpayer. I have been getting harassing phone calls from your company by people who refuse to leave their last names. They are very rude. They say I need you to call me back. That's not something you say. You say would you please call me back. I've gotten many of these from people with names like Brandy and Heidi and so on calling me. They don't tell me what it's about and they are asking me to call them back. I have no idea what this regards, but I need information about it and if I am not treated -- if the harassment does not desist and I am not treated with courtesy, the lawyers and the police will be on this soon.

CBE: Okay. Well, I can see what this is in regards to, sir. I'm sorry, your name?

Taxpayer. [REDACTED]

CBE: Okay. And could I just get your last name.

Taxpayer. Could I have your last name?

CBE: Yes, last name is Benoit, B-E-N-O-I-T. My ID number is 100.

Taxpayer Okay. Mine is [REDACTED].

CBE: Okay.

Taxpayer. What is this company?

CBE: It's the CBE Group.

Taxpayer What is that?

CBE: And it does appear we're handling a business matter here for a [REDACTED]. But, sir, I do have to verify Social Security number and mailing address.

Taxpayer. No. I'm not going to give out my Social Security number and mailing address to somebody who I don't know.

CBE: Okay, I completely understand that. I do have it here in front of me. Is there any portion of it you are comfortable with verifying?

Taxpayer. No, I'm not. Could you please tell me what the CBE Group is?

CBE: Well, we're handling a business matter here, sir, and unfortunately it is a secure matter and so we do have to be careful about who we give that information to. Have you not received the letter we sent out to you?

Taxpayer. No.

CBE: No.

Taxpayer. And I told — people have been calling me about this. You can't just call me incessantly and say you are handling a business matter, not tell me what it is about, ask me for personal private information, and then say that I have to provide you with this information. You have to verify to me who you are. I have never heard of the CBE Group. I've never done business with anything called the CBE Group.

CBE: That's why I had hoped you had received our letter here, because that does explain the situation here.

Taxpayer. Well, you can tell it to me over the phone.

CBE: Okay. And I would love to, but unfortunately, I do have to verify at least some portion of the Social Security.

And it goes on, and the taxpayer never does learn who is calling. Yet the CBE employee never loses her cool, while the bewildered taxpayer gets more and more grumpy. Hardly a damning indictment of private collection behavior, and I'm sure people have seen worse from genuine IRS employees.

Taxpayer Advocate Nina Olson says this just proves that private collection doesn't work, and "The only solution is for the IRS to be collecting the taxes."

That's funny. In response to insistence by Ms. Olson and others that private collection is untrustworthy, the private collection program labors under almost unworkable restrictions; then Ms. Olson complains that private collection doesn't work very well. One of the congressmen responded sensibly, "Why can't we authorize through statute the private debt collectors to say: 'This is CBE calling on behalf of the IRS'?" But that still wouldn't solve the real problem opponents have with the program: the private callers aren't NTEU members.

Links:

Forbes
Govexec.com
Tax Analysts ($link)

Ways and Means Committee Hearings page and links

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