The National Treasury Employees Union said the bill -- the Simmons-Van Hollen Taxpayer Protection Act of 2005 -- has a large bipartisan group of co-sponsors.
The union said the IRS is gearing up this month to begin such a program after the outsourcing was authorized by Congress last year.
Under the program private sector debt collectors would be entitled to a bounty of up to 25 percent of the money they collect and there is no requirement the work be performed in the United States, the union said.
"The Taxpayer Protection Act would undo a serious mistake," NTEU President Colleen Kelley said. The outsourcing "not only generates real dangers for vital taxpayer privacy, it also returns fewer dollars to the U.S. Treasury than would federal employees doing this work."