HR5719: Nixing IRS outsourcing

Almost two years ago, I wrote a post about the IRS turning over certain debt collection efforts to private firms. Today, I caught a blurb in the Virginian Pilot about HR5719, which will, among other things, repeal the law which allowed it. According to the Pilot:

These firms have taken in far less than they have cost the government, although backers say their performance will improve.

From the outset, it was expected that these firms would underperform the IRS’ own collection agents. But Congress didn’t want to give the IRS any money to hire more staff. Now we learn that not only did they collect less money, but they, in fact, cost us money. In what universe does it make sense to spend more money to collect less?

Don’t answer that 🙂

There are some other provisions in this bill, which is called the Taxpayer Assistance and Simplification Act of 2008, that are worthy of note. One, which will no doubt send H&R Block, Jackson Hewitt, Liberty and a bunch of others into a tizzy, is the removal of the IRS debt indicator from the electronic file of a taxpayer who is receiving a refund anticipation loan. This is aimed at curbing the predatory lending practice. Another is a study of alternative methods of delivering tax refunds, including by debit cards, prepaid cards or other means, mainly for the benefit of those who do not have bank accounts.

There is also a provision that would require substantiation of expenditures for health savings accounts (HSAs) similar to that of flexible spending accounts (FSAs). It seems that this provision is causing some to have heartburn. As reported here, President Bush may very well veto this legislation if the provision is unchanged. It seems to me that HSAs and FSAs are similar enough that the rules should be the same.

The bill passed the House 238-179. Voting in support of it was Bobby Scott (D-3rd). Voting against were Rob Wittman (R-1st), Thelma Drake (R-2nd), and Randy Forbes (R-4th).