Grassley: GAO Report Shows IRS Wastes Time, Money on Methods to Collect Tax Debt

Sen. Chuck Grassley, ranking member of the Committee on Finance, made the following comment on a report from the Government Accountability Office released today, “Tax Debt Collection: IRS Needs to Better Manage the Collection Notices Sent to Individuals. GAO-09-976, September 30. http://www.gao.gov/cgi-bin/getrpt?GAO-09- 976.

“The IRS and some members of Congress rushed to cancel the private debt collection program, arguing that the IRS can do the job. Meanwhile, the tax gap is $345 billion a year. Today’s report shows the IRS’ ways of collecting taxes are wasting money and not getting the job done. For fiscal year 2008, the IRS issued close to 22 million collection notices representing $129 billion in taxes owed. While sending notices is supposed to be cheaper than direct contact with an IRS employee, the majority of these notices wind up being handled by phone or in-person by IRS employees – two of the most expensive ways to collect taxes. This, combined with the fact that many of these cases are shelved because the IRS says it lacks resources, tells me the IRS is not capitalizing on the easiest way to close the tax gap and is losing billions of dollars in the process.”

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