WASHINGTON, April 15 (UPI) -- Hiring private companies to chase after modest tax debts appears to be a losing deal for the Internal Revenue Service, critics say.
Three companies hired in 2006 to recover $1 billion in unpaid taxes have so far secured a little more than half of what the program costs, The Washington Post reported Tuesday.
The companies, which have recovered $49 million, keep 24 percent on commissions, the Post reported.
Overall, the program Sen. Byron L. Dorgan, D-N.D., calls "the hood ornament for incompetence," is expected to lose $37 million, the newspaper report said.
"It makes no sense at all to be turning over these tax accounts to private tax collectors that end up costing the taxpayers money," Dorgan said.
David Alito, director of collection for the IRS, said the agency "wouldn't get down to this level, not that we wouldn't have made an attempt."
The IRS uses private collectors to recover uncontested tax bills to help close the gap in an estimated $345 billion in taxes owed, the report said.
