Diversified Collection Services Watch

The Tom DeLay - DCS Connection

2010-11-25T11:27:00.000-08:00

November 24, 2010: Tom Delay of Sugar Land, Texas, the former House Republican Majority Leader and TX-22 congressman during the beginning of the Bush & Cheney administration, was convicted today, 11/24, in Austin, of money laundering and conspiracy to commit money laundering, to local Texas candidates in 2002.

Delay, who's currently known for his last bout on the TV show "Dancing with the Stars," had resigned from the seat in 2005 after being charged by a Texas court.

Delay's wife Christine worked for convicted felon lobbyist Jack Abramoff, along with Julie Doolittle, the wife of John Doolittle, the former representative of CA 04. Two of Delay's former staffers, Tony Rudy and Michael Scanlon, who went on to "other occupations," were also convicted in the Abramoff scandal in 2005 and 2006. Besides having his ex staffer and Abramoff paying Christine a monthly salary from "Alexander Strategy Group" between 1998 and 2002, Delay took trips to the Commonwealth of the Marianas Islands and golfing trips to Scotland and attended sporting events for free because of his association with Abramoff's lobbying firms.

Delay was not charged in the Abramoff scandal. Recently, on Nov 15, 2010, the former lobbyist for the city of Lincoln, CA, Kevin Ring, an ex staffer of former Congressman John Doolittle, was convicted in Federal court the Abramoff scandal on charges of conspiring to corrupt, paying a gratuity, and 3 counts of honest services wire fraud. Doolittle was named as an unindicted co conspirator in the trial's documents, along with his spouse. Doolittle has not been charged by the DOJ in the Abramoff case.

In today's Texas conviction, prosecutors said Delay and 2 co conspirators, John Colyandro and Jim Ellis, used Delay's PAC, "Texans for a Republican Majority," to illegally give $190,000 in corporate donations to candidates in the state Texas legislature, by first sending the corporate money through the RNC. The RNC, which had been provided with a handy list of 7 people who just happened to be running for office and how much money they could use, when Jim Ellis dropped that check off, then gave the money to the Texas House candidates. Which is not legal in that state. Six of the recipients of the T.R.M. pac cash from Delay won, and went on to push through a state redistricting plan.

Ellis and Colyandro have not yet gone to trial in the case. Delay's attorney says he is disappointed, and plans to appeal.

Back on Sept 21 2004, when John Colyandro, Jim Ellis, and Warren Robold were indicted, a California company was also charged, named "Diversified Collection Services Inc" of San Leandro. They were debt collectors for student loans in default. They were also a subsidiary part of "Performant Corporation." They in turn were supported by the private equity firm "Parthenon Capital." Parthenon Capital, in turn, also invests in "Wildlands, Inc" which is the local company that does "mitigation banking," or that land swap routine where developers who want to develop or change zoning one piece of property with wildlife habitat, such as a wetlands, but can't, have to buy and set aside another piece of habitat with the like amount of similar habitat.

You may have seen those little signs once in a while, on a fence of a set aside property, saying "owned by" Wildlands. Especially in Placer County, which is not only the easternmost habit for the arch enemy of developers and some infamous local politicians, the VERNAL POOL FAIRY SHRIMP, but which has a lot of those seasonal vernal pools - alkaline grassland depressions, which fill with rainwater in the spring for the shrimp, before drying up each May - and a highway project that was curiously designed to go right through the heart of them, instead of merely widening another parallel road.

For the past 4 years, every time I've seen one of those signs, I'd think of two things - one local, infamous Republican politician literally yelling about the FAIRY SHRIMP and the ENVIRONMENTAL TERRORISTS ruining everything ! , that dying downtown in Lincoln, the traffic jams and bypass road that wasn't going anywhere, and wondering how Tom Delay somehow fit into all of this. Even the Western Placer Schools District has one of these conservation banks to set aside land. Developers hot on getting a project approved, or somebody wanting to sell some undeveloped pasture, could be very... generous.

Class Action Lawsuit Over Garnishment Notices

2009-04-30T12:39:00.000-07:00

Performant, the parent company of Diversified Collection Services, has been named in a class action lawsuit.

One of the issues is vague threats of "administrative garnishment" that intimidate many people into paying money they do not owe.

As has been reported before, the head of compliance, Dennis Christie, is a committed neocon, so he's probably angling for a bailout.

DCS Compliance Department: Run by a NEOCON

2009-03-21T08:38:00.001-07:00

If you complain to Diversified Collection Services (DCS) enough, you'll get a letter from Dennis Christie, the head of their regulatory compliance department. He's a supporter of the Freedom Project:

Christie, Dennis (Diversified Collection Services Inc), (Zip code: 94513) $600 to FREEDOM PROJECT; THE on 05/26/04

The Freedom Project seeks to make sure neocon Republican candidates are nominated and elected.

Isn't it interesting the DCS is in such trouble with its state and federal collection contracts?

Contact your congressman or congresswoman, and demand that DCS' contract in your state be terminated IMMEDIATELY! 8 years of the neocons was enough! DCS will probably ask for a bailout!

The Beginning of the End of DCS?

2009-03-07T07:15:00.000-08:00

So much for privatizing the federal government.

The Internal Revenue Service's decision this week to quit using debt collectors to dun delinquent taxpayers was celebrated by public employee unions as a pendulum shift after watching the Bush administration often opt for private contractors over federal workers to deliver government services.

The IRS program was a small one, bringing in a little more than $80 million since its inception in 2006. But it represented an ideological toehold for conservatives who believe that private companies are more efficient than government agencies.

It was an ideology embraced by former President George W. Bush, who famously — and unsuccessfully — toyed with the idea of partially privatizing Social Security.

Privatization won't disappear. It's too widespread in a federal government that relies on private contractors for work as diverse as computer programming and providing security in Iraq. But with a new Democratic administration in charge, experts don't expect to hear much about privatizing government functions from President Barack Obama.

"I think we're going to see a reversal of privatization," said Harvey B. Feigenbaum, a political science professor at George Washington University. "When contracts come up for renewal, they will see if it would be better for the public sector to do the work."

IRS contracts with private debt collection agencies to go after delinquent taxpayers expired Friday. In deciding not to renew them, IRS Commissioner Doug Shulman said he concluded after a monthlong review that tax collection could best be done by government workers.

The agency had been turning over to private debt collectors some delinquency cases, often in the $5,000 to $10,000 range, that the IRS lacked the manpower to pursue. The program cost about $7.6 million a year to administer, and private contractors, such as the controversial Diversified Collection Services (DCS) of Livermore, CA, were allowed to keep about a quarter of the taxes they collected.

The program brought in more money than it cost to operate, but it had become a political headache for the IRS. The union representing IRS workers and the National Taxpayer Advocate, an independent ombudsman within the agency, opposed the program, as did some Democrats in Congress. Other powerful lawmakers from both political parties supported it.

Colleen M. Kelley, president of the National Treasury Employees Union, said the decision to end the program "reaffirms" that "no one can perform the work of the federal government better than federal employees."

Sen. Charles Grassley of Iowa, the senior Republican on the Senate Finance Committee, disagreed. He said the IRS used flawed methods to review the program and succumbed to public employee unions and their allies.

"It seems the IRS and Treasury Department went out of their way to knock out an emerging, effective and evenhanded way to collect tax debt that the IRS will otherwise never collect," Grassley said. "It's discouraging when commonsense efforts to make things fair for honest taxpayers in a way that's decent and logical all around get beat down by vested, powerful interests in Washington."

Paul Light, a professor of public service at New York University, said he expects the Obama administration to de-emphasize the use of private contractors for government work. But, he said, that probably means hiring more government workers, which comes with the political baggage of enlarging the federal government.

"If you aren't going to contract out services, how are you going to provide them?" Light asked. "I'm fairly certain there will be an increase in the number of federal government workers."

At the IRS, Schulman said he expects to hire more than 1,000 workers this year to increase collections. He encouraged workers from private collection agencies to apply.

Night of the Evil Dead

2009-01-17T08:50:00.000-08:00

They must hire zombies at Diversified Collection Services.

As we've reported here, DCS collects for various government agencies.

Someone made a compromise with a state that uses DCS to do its collections. The state doesn't expect any more money, but DCS does!

DCS' position is that nothing has changed! They want the full amount!

This is almost certainly going to end up in court. It is just another case to show why private collection agencies are NOT a good choice for public debt collections.

What happened to DCS in 2005?

2008-12-04T10:24:00.000-08:00

This-it seems they never learn...

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A class action lawsuit has been filed in the Southern District Court of Indiana against Diversified Collections Services, Inc. for violations of the Fair Debt Collection Practices Act (FDCPA) which prohibits debt collectors from engaging in abusive, deceptive and unfair collection practices. Class members seek statutory damages, reasonable attorney’s fees and costs of the litigation.

Specifically, the complaint alleges that Diversified Collection Services, Inc. attempted to collect a debt from the plaintiff that was owed to the US Department of Education. The letters failed to provide her with notice that she had 30 days to challenge the validity of the debt and seek verification of it, which she alleges is in violation of the FDCPA.

A Beauty School She Never Attended...

2008-10-28T13:46:00.000-07:00

July 5, 2006

An Outcry Rises as Debt Collectors Play Rough

By Sewell Chan

The rise in American consumer debt has been accompanied by a sharp increase in complaints about aggressive and sometimes unscrupulous tactics by debt collection agencies, a phenomenon that has government regulators increasingly concerned.

In April, the Federal Trade Commission, which enforces the federal law that governs debt collection practices, reported that it received 66,627 complaints against third-party debt collectors last year — more than against any other industry, and nearly six times the number in 1999.

The agencies often buy the debt from more established companies for pennies on the dollar and seek to collect even if the debt has been paid or was never valid to begin with. Sometimes, consumers pay up simply because they are worn down by threats from the companies and fear damage to their credit rating.

One New York City victim, Judith Guillet, complained and filed a police report in 2003 after receiving a Chase credit card bill for $2,300, including five charges from Amoco gasoline stations in the Bronx. She has never owned a car or had a driver's license.

The bank agreed that the charges were not valid, but the debt case hung on because the bank turned it over to a collection agency. Last November, that agency obtained a court order allowing it to freeze Ms. Guillet's bank account even though it could not demonstrate that the debt was valid.

"I felt helpless," said Ms. Guillet, 57, a nurse who is retired on full disability. "I couldn't pay my rent, buy food or pay my electricity bills."

Officials in New York City, which has some of the most stringent consumer protection laws in the country, said the number of local complaints about debt collectors more than doubled in three years — to 900 in the 2006 fiscal year, which ended on Friday, from 774 in 2005, 509 in 2004 and 422 in 2003.

The city's Department of Consumer Affairs recently subpoenaed records from eight companies with the most complaints and is considering whether to propose tougher regulations. And last month, New York's attorney general,Eliot Spitzer, sued a national debt collection company, accusing it of trying in thousands of cases to collect on debts that could not be verified.

The Federal Trade Commission enforces the Fair Debt Collection Practices Act, the 1977 law that prohibits abusive, deceptive and unfair tactics by collection agencies. Last July, the commission won $10.2 million — its biggest judgment for illegal collection practices — in a case against National Check Control of Secaucus, N.J. The company, now out of business, overstated the amounts consumers owed and threatened them with arrest and prosecution.

"We're very concerned about the increase in complaints about debt collection, and we are stepping up our enforcement against the debt collection industry," said Peggy L. Twohig, who directs the F.T.C.'s Division of Financial Practices.

In its most recent annual report on the act, the commission identified tactics that have become particularly common: misrepresenting the nature, size and status of a debt; making constant harassing and abusive phone calls at all hours; contacting a debtor's relatives, employers and neighbors; failing to investigate claims by consumers that a debt is paid, expired or fraudulent; and threatening to sue or seek prosecution. (Such threats are illegal unless the collector has both the legal basis and the intent to take such action.)

In addition to filing complaints with regulators, a growing number of consumers are suing over debt collection abuses, according to the National Association of Consumer Advocates.

Stephanie M. Clark, 36, and her husband sued the Triad Financial Corporation of Huntington Beach, Calif., and Verizon Wireless in Federal District Court in Santa Ana, Calif., in August 2004. After they fell behind on their car payments, the suit alleged, Triad hired a collector who threatened them with arrest, posed as a Verizon Wireless employee, changed the password on their cellphone account and obtained their cellphone records. According to the suit, the collector called dozens of the couple's relatives, friends and business associates, posing as a law enforcement officer and telling them that there was an arrest warrant for the Clarks.

"They contacted former and future employers," said Ms. Clark, who now lives in Healdsburg, Calif. "It was very stressful. We felt completely violated. Humiliated." In June 2005, before the case was to go to trial, the companies settled with the Clarks for an undisclosed sum. (Both companies said they could not discuss the settlement, which also resolved the original debt, because of a confidentiality agreement.)

Last July, Leigh A. Feist, 39, of Minneapolis, took out a cash-advance loan of around $570. From September to April, a collection agency, Riscuity, called Ms. Feist constantly on her cellphone and at her job at a health insurer, according to a suit that her lawyer, Peter F. Barry, filed on May 25. The calls were so frequent, Ms. Feist said, that her supervisor examined the record of incoming calls and reprimanded her.

Edward Chen, president of Riscuity, based in Marietta, Ga., said that he was not aware of the suit but that the company stops calling debtors at work at their request.

Regulators and consumer advocates say many creditors prefer to hire collection agencies or sell bundled debts to debt buyers because of the expense of litigation.

Robert J. Hobbs, the deputy director of the National Consumer Law Center, an advocacy organization based in Boston, attributed the rise in complaints about abusive collection practices to three broad trends: the rapid growth in the number of collection agencies, the tightening of bankruptcy-protection laws last year and the record level of consumer debt, now totaling $2.2 trillion, complicated by rising interest rates and stagnant personal incomes. Identity theft and Internet fraud are also cited as factors.

Rozanne M. Andersen, the general counsel at ACA International, which represents 3,600 debt collection agencies, more than half of the estimated 6,000 to 7,000 such companies in the United States, said its members adhere to a rigorous code of ethics. "To the extent there are abusive practices taking place in the industry, ACA International absolutely denounces those practices that fall outside of the law," she said.

Eric M. Berman, a lawyer in Babylon, N.Y., and an officer of the National Association of Retail Collection Attorneys, whose members represent creditors, said complaints filed with the government were not always legitimate. For example, he said, some debtors complain when debt collectors will not accept partial payments on the same installment terms that the original lender provided, a practice that may be frustrating to the debtor but is legal.

"People need to get much more education about credit accounts and what they're getting into," Mr. Berman said. "In addition, there are a small minority who are scammers — people who will run up credit with no intent of paying it and then try to negotiate their way out of it."

While consumer advocates say that abusive collection practices have a disproportionate effect on poor people, the elderly, immigrants and people with limited English, the rise in complaints seems to span the social and economic spectrum.

Mary H. Monroe, 71, a retiree in Williamsburg, Brooklyn, received repeated calls last year from Diversified Collection Services, part of the Performant Financial Corporation of Livermore, Calif., insisting that she owed more than $8,000 in tuition and fees at a beauty school that she had never attended. "I thought they had to be kidding," she said.

She said the calls continued, despite her protests that the collectors had the wrong person. "I finally got a lawyer to write to them, and they haven't bothered me since," she said.

Maria Perrin, a senior vice president at Performant, said the company halts its efforts when it learns of cases of mistaken identity. "Honestly, we don't want to spend time with the wrong person," she said.

James M. Rhodes, 65, was not as lucky as Ms. Monroe. In November, Mr. Rhodes, a commercial lawyer and arbitrator on the Upper East Side of Manhattan, received the first of three letters from Midland Credit Management, part of the Encore Capital Group of San Diego. The company insisted that he pay $2,800 on a MasterCard he never had.

Mr. Rhodes repeatedly insisted that the debt was not his, and then wrote to state and city officials. In April, the city's Department of Consumer Affairs got Midland to acknowledge that the debt was erroneous. But that was not the end of it, because in the meantime, in March, Mr. Rhodes heard from a second collection agency, Phillips & Cohen Associates of Westampton, N.J., demanding payment on the same account, this time for $1,900. Mr. Rhodes sent letters of protest and contacted the city again.

J. Brandon Black, the chief executive of Encore, said, "The vast majority of fraud or mistaken-identity complaints and concerns are taken care of at the level of the issuer." Matthew A. Saperstein, a vice president at Phillips & Cohen, said it closed the account on May 12 after receiving a letter from Mr. Rhodes.

Ms. Guillet, the Bronx woman with the gasoline charges, spent two years insisting that her credit card charges were not valid. Finally, lawyers for New Century Financial Services of Cedar Knolls, N.J., which had bought the debt, obtained a judgment in New York City Civil Court that led Emigrant Savings Bank to freeze her account. Ms. Guillet, who has fibromyalgia, a muscle pain and fatigue disorder, lives on $1,324 a month in Social Security Disability Insurance.

Although companies must serve notice before getting permission to freeze a bank account, such notices are often misdirected or, as in Ms. Guillet's case, ignored by people who are fearful or confused.

A nonprofit legal clinic, MFY Legal Services, got the account unfrozen in January and, after providing extensive documentation that Ms. Guillet had saved over two years, reached a settlement with New Century, which agreed to stop contacting her and dropped the case. (A company official, Jeff Esposito, said he could not discuss the case.)

"It stressed me out so bad," Ms. Guillet said of being pursued for a debt she did not incur. "I wondered what else might be out there that I don't know about."

DCS violates the FDCPA!

2008-10-26T13:22:00.000-07:00

In November 1996, Sandra Rodriguez-Suncin and Walter Steve Suncin ("plaintiffs") filed a lawsuit complaining that Diversified Collection Services ("DCS") violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. 1601 et seq., by creating and drawing checks on their checking account based on authorization given more than five days before the check was deposited without giving them notification of the deposit 3 to 10 days prior to the deposit.

In plaintiffs' case, plaintiffs entered into an agreement with DCS to repay a student loan owed by them. The agreement provided that Western Union Financial Services would issue a third-party draft against plaintiffs' checking account each month for a certain amount to pay plaintiffs' student loan obligation and a second check each month payable to DCS for service fees. DCS did not provide notice to plaintiffs "not more than ten nor less than three business days" prior to issuing and depositing these checks. Plaintiffs allege that this procedure violates 1692f(2) of the FDCPA.

DCS Tries to Justify Private Tax Collection

2008-10-26T13:12:00.000-07:00

House Committee on Ways and Means

Statement of Jon D. Shaver, Chief Operating Officer, Diversified Collection Services, Inc., San Leandro, California

Testimony Before the Subcommittee on Oversightof the House Committee on Ways and Means
May 13, 2003Mr. Chairman and Members, good afternoon. My name is Jon Shaver. I am Chief Operating Officer at Diversified Collection Services, Inc. (DCS) headquartered in San Leandro, California. We have offices in Grants Pass, Oregon; Lathrop, California; and San Angelo, Texas.

Diversified Collection Services Background Information

DCS specializes in assisting federal and state government agencies in recovery of delinquent and defaulted debt, both tax and non-tax. In our industry, we are recognized for producing the best results for our clients and are considered the benchmarking standard against which the performance of other firms is measured. Our performance superiority is a result of our state of the art technology, the professionalism of our staff, and the knowledge gained from over a quarter century of practice in the government debt collection arena.For the federal government, we have been effectively collecting defaulted student loans since 1990 pursuant to several contracts managed by the U.S. Department of Education. Additionally, we are now in our second contract with the U.S. Department of the Treasury, where our work focuses on recovering non-tax debts owed the federal government.

In addition to our work with the federal government, we also provide collection services for numerous federally chartered state student loan guarantee agencies. Lastly, we contract with numerous states to provide supplemental collection services for the recovery of delinquent tax accounts receivable.

How The Private Collection Industry Works

The private collection industry, almost exclusively, provides its services to clients—whether government or private sector—on a contingent fee basis. That is, we receive payment generally only in those instances where we produce a successful resolution result. In most instances, resolutions are in the form of payments but, in the government debt arena, we are also often compensated for administrative resolutions as well. An administrative resolution is one that closes a case without a payment—examples include for reasons of death, permanent disability, eligible bankruptcy, defunct corporations, and so on.

Federal Contract Collections Experience Has Been Excellent

The experience of the federal government with contract collection services has been outstanding. Today, the U.S. Department of Education, pursuant to the requirements of the Higher Education Act, manages a nearly $13 billion dollar defaulted student loan portfolio—many of these loans being previously designated as uncollectible—and is recovering hundreds of millions of dollars per year from it. The U.S. Department of the Treasury, pursuant to the Debt Collection Improvement Act, is currently placing more than $4.5 billion in non-tax federal debts for collection with outstanding results.

These programs encompass all debt—with some special international exceptions—except delinquent taxes, owed to the government of the United States. The government’s experience has been positive as these contracted efforts embody best industry and government collection and contract oversight practices, along with a very public accounting and accountability process. Strict standards, performance based contracting, public accountability, and a blending of the best capabilities of government and the private sector in a partnership pursuing the public interest is a recipe for success—one which we endorse for application in the case of the IRS’ major problem with delinquent tax accounts receivable.

We Respect The Debtors And Taxpayers With Whom We Work

We are aware that, because of taxpayer abuses by IRS in the past, there is concern about the application of the industry standard of contingent fee compensation. We make careful effort here to point out that private industry has no reputation for taxpayer abuse. We do not have power to threaten, intimidate, or harass as a result of enforcement powers. We do not determine debts owed. We are legally required to work with and assist taxpayers who dispute their tax debts.

Taxpayers with whom we deal have immediate access to remedies that can strongly sanction improper conduct. The private debt collection industry has decades of experience in consumer protection and respecting due process.

Twenty-Five Years Of Consumer Protection

This year marks the twenty-fifth anniversary of the landmark Fair Debt Collection Practices Act, the template for today’s consumer protection standards. The private consumer sector has a mature and robust body of consumer debt protection law in place that the private collection industry conforms to lock-step.

If we were to fail to honor these laws, we would lose contracts, be subject to civil penalties, lose our reputations, and ultimately go out of existence. Actual experience shows that our behavior is just the opposite of the stereotypical view. Our industry makes literally millions of contacts per year, with only an occasional compliance problem.

Finally, while many people would prefer that we not contact them and remind them of their obligations, there are many that have thanked us for our professionalism and for relieving them of the worry and adverse effects of having unpaid government obligations hanging over them.

We are an industry that relies on providing information, communication, and assistance in the decision-making relating to debt resolution for both individuals and corporations. We have no power of any kind, neither to harass or intimidate anyone nor to take any enforcement action resulting in involuntary surrender of property or assets. Our effectiveness is achieved because we are better at finding missing people and corporations than is the government and in communicating with them in an effort to find ways to assist them in voluntarily resolving their obligations.

Service As A Subject Matter Expert To The IRS

Because the depth and breadth of our experience, we were selected through a national competitive review process to consult with the Internal Revenue Service, along with two other national collection services firms, regarding its prospective supplemental contract collection services project. This project, which would require the authority and provisions contained in H.R. 1169, would involve the IRS’ use of private collection firms to supplement the collection function of the IRS. More specifically, it would involve limited collection activities by private firms to recover delinquent tax accounts receivable in business and corporate cases where the delinquent tax obligation is undisputed by the taxpayer.

With more than twenty-five years of experience in federal and state contracting for collection services as context, we can say unequivocally that the planning and program development process employed by the IRS staff in developing the contract collections support program is the best, most thorough, and complete process ever conducted. Examination of industry and other government best practices, consultation with industry as to the practicality of certain concepts, an overarching concern for taxpayer privacy protection, assurance of taxpayer due process, and a strongly focused sense of fairness and equity toward all taxpayers are among the highlights of the exemplary effort of the IRS relating to this project.

IRS’s preparation and dissemination for public review and comment of a comprehensive and detailed draft Request for Information should give Congress and the public comfort that the IRS has been careful and deliberate in its planning. The scope and intent of the project is clear and is intended to use the private sector only on a limited basis to do what it does best—find and contact delinquent individual and corporate taxpayers and provide them with information and assistance on how to best voluntarily resolve their tax delinquencies.

DCS Is A Member Of A National Industry Coalition

DCS is a member of a broad-based national coalition of private sector collection and debt recovery firms that strongly support the idea of supplemental contract collection services for the IRS and that, accordingly, supports H.R. 1169. We in industry have had ample time to publicly discuss the IRS draft Request For Information, the process by which it was developed, the effects of placing the volume of delinquent federal tax accounts receivable on the capacity of the private sector, and other related issues.

What Will Be Accomplished If H.R. 1169 Is Passed?

DCS, consistent with the opinion of others in our industry, believes firmly that the supplemental contract collection services program envisioned by the IRS and as reflected in the language of H.R. 1169 will do several things:

Restore a sense of fairness to the tax system—although some may not like paying taxes, all will be treated fairly and consistently.

Improve voluntary compliance and disincentivize the waiting game. No individual or corporation will be rewarded by simply “outwaiting” an overburdened IRS until the statute of limitations runs its course.

Find missing taxpayers—by bringing the technological superiority and flexibility of the private sector to bear on the problems of finding and contacting “skipped” taxpayers; that is, those who have moved and are unlocatable by the IRS. Simply put, the private sector’s proprietary tools for finding and working with such individuals and corporations are unparalleled.

Enhance IRS’s level of customer service to all taxpayers—private contractors will locate and contact each delinquent individual and corporation and work through the process of achieving a voluntary financial or administrative resolution where possible.

Additionally, private firms will be readily accessible to taxpayers and will maintain a continuous relationship with those in repayment arrangements, assisting them as needed throughout the repayment process. IRS staff will be able to focus on complex cases requiring their special training and expertise using tools uniquely available to them.

Produce revenue for the government, very likely in excess of the government’s current estimates of recovery.

Create needed jobs—thousands of private sector tax-paying jobs will be created without transferring or eliminating existing or authorized federal tax collector positions—our private sector effort will be limited to resolving the backlog of delinquent tax receivables and will in no way be involved with current year receivables. Moreover, the private sector will only have authority to work out voluntary arrangements with taxpayers as no enforcement authority will be conveyed whatsoever.

Key Aspects Of Tax Collection Are Not Inherently Governmental

We have occasionally encountered, during our many discussions with members of Congress concerning H.R. 1169, the notion that tax collection is an “inherently governmental” function that ought not be contracted for. While we would agree that seizing an individual’s or corporation’s assets, implementing a lien or levy, or conducting a criminal investigation are clearly functions that ought to be limited to the role of government, we are unconvinced that finding and talking to taxpayers about tax debt owed the government is the exclusive domain of government. Our view in this regard is held by forty-states in the United States, all of whom contract for supplemental collection services in the recovery of delinquent individual and corporate tax debt.

The Experience Of Forty-Two States Is Instructive

The states recognize, from long experience, that the private sector has an important and useful contribution to make in the recovery of delinquent tax debt, even though the scope of engagement of private collection firms in the service of the states is limited to the same role that the IRS envisions for its program—that is, finding and contacting delinquent taxpayers and working through voluntary repayment plans with them or referring back to the IRS for an appropriate administrative resolution (hardship, death, disability, innocent spouse, etc.) or other action.

The experiences of the states vary based on what type of supplemental collection support program they conduct and depending on the extent to which best practices are embedded in their programs. Those conducting well-planned, professional programs are achieving excellent recoveries and ensuring that all taxpayers are treated fairly, with intense focus on ensuring taxpayer privacy and due process protection. Nearly all of the states have in place well-developed Taxpayer Bills of Rights and additionally, the fundamental consumer protections embedded in the federal Fair Debt Collection Practices Act are made applicable to states’ taxpayers by means of contractual provision.

Taxpayer Privacy, Due Process Rights, And Confidentiality Will Be Protected

A fundamental concern of Congress with regard to IRS contract collection services has been and continues to be taxpayer privacy, due process protection, and data security and confidentiality. These issues are also of concern to the IRS, as reflected in its draft Request For Information document, and to the private sector that would be responsible for compliance. We are confident that the data security and confidentiality safeguard provisions that the IRS envisions are readily implementable, auditable, and practical.

We are certain that abiding by the requirements for due process and professional treatment of all taxpayers is readily achievable. How do we know? We know because we have been providing similar levels of protection for our other state and federal customers and their taxpayers, borrowers, and debtors for many years. While we are particularly sensitive to the issues of taxpayer abuse that Congress has periodically addressed through the Taxpayer Bills of Rights and the Restructuring and Reform Act of 1998, we are nonetheless confident that we can meet the strict standards that Congress and the IRS will impose through the provisions of H.R. 1169 and contracts issued pursuant to it. Moreover, we will continue to apply the consumer protection standards that other applicable federal statutes require while performing tax collection services for the federal government.

The IRS Contract Collection Support Program Is Feasible

Finally, we would offer our view that the supplemental contract collection support activity envisioned in the bill is practical and feasible. As noted earlier, the private sector stands ready to assist the government in this undertaking, having in place the technical and people capability and capacity as well as the means to quickly expand both in service to the IRS. The program that H.R. 1169 would authorize and that is reflected in IRS’ publicly vetted plan document is one that reflects learning from past incomplete efforts, as well as the very best practices reflected in other successful federal and state public debt collection work.

Recommendations To Improve The Current Bill

While the fundamental provisions of H.R. 1169 are solid, we would suggest that the Committee consider amending the bill to expand the scope of the value of tax accounts that would be placed for collection. The IRS, in its draft Request For Information, has identified at least $30 billion in receivables that would benefit from the efforts of the private sector. Extending the scope from $13 to $30 billion would ensure that a more balanced portfolio, including mid-balance and high-balance accounts would be placed for collection. Moreover, the government would receive significantly greater revenues. Our industry has been consistent on this recommendation and we make it again here, subject to the provision that implementation would be administratively feasible and that the implementation would be within a three year period from date of enactment of H.R. 1169.

We have also suggested some technical changes to ensure that there is greater clarity with respect to ensuring that existing laws not be in conflict as a result of contracting procedures or requirements and that there be an administrative process available to taxpayers, similar to that in place for the IRS, to resolve disputes quickly and without litigation. We would note quickly that no taxpayer would be precluded from litigation under existing federal law; rather, this provision would simply standardize and harmonize remedies for complaint resolution.

Our recommended language has been submitted to staff for your consideration.

H.R. 1169 Is A Good Government Measure

Good government opportunities may be many, according to some observers. However, few are as clear as this one. Working together, the government and private sector can truly partner and produce jobs, additional revenue, greater fairness in the tax collection and administration system, and confidence by the public that their government is paying attention to its business.

Thank you for this opportunity to hear our views on this matter. I would welcome any questions that you may have.