Death Tax Repeal Permanency Act of 2007

Mr. Speaker, I yield myself such time as I may consume.

Well, it's appropriate that we talk about a $600 toilet seat because, indeed, this bill smells to high heaven.

The truth of the matter is you will hear a lot of wild claims made on the House floor today, but in truth the Joint Taxation Committee, Congressional Budget Office, and every other independent agency has testified that passing this bill will cost the American taxpayers more than $1 billion. It is a testament that this program is working and will continue to work to save dollars for the American taxpayer by going after those who owe their taxes on behalf of those of us who pay our taxes.

Mr. Speaker, I rise today in strong opposition to H.R. 3056. This bill would eliminate a program that is actually making money for the government: overdue tax bills collected by qualified private companies from people that owe too little for the IRS to use up valuable resources in going after them. To date, the IRS has turned over 90,000 cases worth nearly half a billion dollars. And the dollars add up to the tune of $32 million collected since last month, and there's more to come. As I said, more than $1 billion over the next decade.

This is money that is helping to close the tax gap and is revenue that the Treasury Department can use to hire more employees. Under the program the IRS can retain up to a quarter of the collection to hire additional enforcement workers, and already some $5.7 million has been designated by the IRS for collection activities and $20 million has gone toward deficit reduction. So it is helping reduce the Federal deficit.

Some argue that collection agents have harassed taxpayers. The reality is that these agents are held to the same standards as IRS employees when it comes to protecting taxpayer rights. As a matter of fact, out of 51,000 cases, it was testified at our recent Ways and Means Committee hearing there were no, zero, violations of taxpayer privacy, zero.

These companies do face difficulties in finding the correct person, as the IRS does not provide the collectors with the taxpayers' last known phone numbers. This might be an area to look for reforming, rather than killing, this important program.

Some argue that the IRS could collect the same debts more cheaply if they could hire more employees. But the truth of the matter is these taxpayers have already been contacted four times by the IRS and they have not had luck in collecting them.

A GAO report in 2004, General Accountability Office, says that these private companies can recover $4.60 for every $1 spent while additional IRS employees would recover less, would be less efficient in recovering.

The bottom line is that the program is working, taxpayer rights and privacy are being protected. The program allows IRS to do what they are good at: enforcement of higher profile debts while allowing private collection agents who have to be qualified to collect smaller debts owed by tens of thousands of taxpayers.

And private debt collectors aren't a novel idea. Other Federal agencies and many States, 40 States, and thousands of local government agencies use private agents to collect everything from overdue income taxes, alcohol and cigarette taxes, to local property taxes. It's working, and it would be a disservice to taxpayers who actually pay their taxes on time to discontinue it now.

The bottom line truly, Mr. Speaker, is are we serious about closing the tax gap. Are we serious about collecting the debts that are owed? People here tend to always see things in black and white, and you will hear this in the debate today. You are either for or against the IRS, for or against private debt collectors.

The truth of the matter is our goal is to collect the taxes the most efficient way. It will take a partnership of our IRS employees, who do an excellent job, and private debt collectors, who do an excellent job in the tougher debts, to collect in order for the taxpayers to truly get the dollars that they are owed and this country the dollars that are truly owed.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I would point out that the General Accountability Office has testified that, in fact, private debt collectors are more efficient per dollars than the IRS employees with these types of debts, which is what we are comparing. And, again, we have IRS employees with the ability to levy liens and fines, they are able to compel certain types of taxpayers to pay efficiently, and they can go after the larger, more complex cases very well. It is this group here that we've had difficulty collecting taxes from in the past that these proven tax collectors across 40 States have done such a good job collecting. And that is the bottom line; are we going to collect the taxes of the American people or not?

With that, I would yield 2 minutes to the ranking member of the Trade Subcommittee, the gentleman from California (Mr. Herger), who has worked very hard on behalf of American taxpayers.

Mr. Speaker, I would point out that this practice has already generated nearly $6 million for additional IRS agents in collection activities at the agency.

At this time, I would like to yield 3 minutes to the gentleman from Florida (Mr. Boyd).

Mr. Speaker, I would point out that at the Ways and Means hearings, the Government Accountability Office testified they had looked for but could not find any evidence that the private collection agency selected individuals for the survey based on their perception of what the responses would be. I would point out that the same agency testified that there were zero, no violations of any privacy rights through 51,000, and growing, cases, zero violations. And I do wish that those telephone tapes could be played here on the House floor so members of the public as well as Congress could hear the professionalism of those phone calls as they seek to identify sensitively the individuals who do owe dollars to the American taxpayers.

I will point out, too, that if these debts were so easy to collect by the IRS, why did the IRS already have four opportunities to collect them from each taxpayer before they were turned over to these agencies, who have done such a good job, a solid job of collecting them?

With that, I would yield 6 minutes to the gentleman from New York (Mr. Reynolds) who has not only fought on behalf of taxpayers but has a number of women and minority workers and professionals in his district who have done a wonderful job in this arena.

(Mr. REYNOLDS asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I would point out that while the claim has been made that our taxpayers have been harassed, IRS itself has testified there is a 97 percent satisfaction rate with the process that is already in place with these private collection agencies. I must point out, too, that while a claim is made that past Congresses starved the IRS, the truth is actually the opposite. The agency last year added over 200 new field collection personnel. This year's budget will add even more agents to the IRS. This program that is being sought to be eliminated has already generated almost $6 million for more IRS agents in a collection agency.

Mr. Speaker, I would like to inquire how much time does each side have remaining.

At this time, I would reserve the balance of my time.

I would point out it is difficult to have an abusive program when there is 97 percent customer satisfaction and zero privacy violations and zero Fair Debt Collection Act violations. Zero. I point out as far as efficiency, you don't have to take anyone's word on this floor if this program is working. Attached to this bill is testimony that says eliminating it will cost the U.S. taxpayers $1 billion.

So you don't have to take our word for it. The experts who are independent, who have looked at this issue, know this is an efficient program for the U.S. taxpayers.

Mr. Speaker, I reserve the balance of my time.

MR. POMEROY. Mr. Speaker, our information is somewhat different from the information just propounded. We believe indeed the record would show there have been 83 complaints. These complaints include taxpayers who have

received letters with another taxpayer's information inside. Now, if this isn't a taxpayer privacy violation, I don't know what is. At least one fine has been assessed, and this is in the early going of the program.

Mr. Speaker, I will acknowledge perfection is a pretty hard standard to meet, but they have not met perfection and they have not generated the money in collection that was advertised at the beginning of this endeavor.

With that, I yield 2\1/2\ minutes to my friend the gentleman from New Jersey (Mr. Rothman), who has long had concerns about this initiative and worked hard to end it.

Mr. Speaker, I would point out that private debt collection is used by 40 different States, whose Governors are Republican and Democrat, and thousands of local government agencies and organizations, again, both Republican and Democrat. This isn't an issue of privatization, it is an issue of efficiency. This partnership between the IRS and private debt collectors for this group of taxpayers who are hard to collect those taxes from will yield an additional $1 billion for the American people.

With that, I reserve the balance of my time.

Mr. Speaker, I would remind the Chamber that more than 40 States, not just this administration, more than 40 States, Democrat Governors and Republican Governors, use the exact same type of collection techniques, the same partnerships, to do what is right for the American people.

I would point out that we have heard claims today of literally tens of thousands of people who have been harassed by these private debt collectors, all the abuses. I would simply challenge you to name one. In this debate today, name one. Name the person, name the case where there was a privacy abuse or thousands of harassing phone calls. I would predict there will be no name mentioned.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I would point out that attached to the majority's bill that this House is considering today, according to the majority's bill, the Joint Tax Group testifies and asserts that this program, that is working today, will collect $1 billion more. You can hear every claim you want on this House floor, but their own bill says to the American public that this program will collect $1 billion more than if it were to be eliminated. That is not at dispute today.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the gentleman from New York (Mr. Reynolds).

Mr. Speaker, may I inquire as to the time remaining.

I will be brief, Mr. Speaker.

We hear a lot of claims today about the efficiency of this program. But our agencies, the independent agencies, the Government Accountability Office and Joint Tax, make the point attached to this legislation that this program has worked, is working efficiently, and will save U.S. taxpayers more than $1 billion.

You will hear today about abuses. But the fact of the matter is they can name not one in any independent agency, including the IRS, the Treasury. Examination of the program has showed 97 percent customer satisfaction, zero privacy violations, and zero Fair Debt Collection Act violations, zero, no matter what is talked about.

Mr. Speaker, the truth of the matter is, the question before us today is not about privatization. This is about credibility. This majority has talked about closing the tax gap, what is owed and what is paid. Yet today we will widen that tax gap by over $1 billion. So the question is will we walk the walk, or just talk the talk about the tax gap.

This partnership between the IRS and these private collection agencies is working for the American public. We ought to let it continue to work for the American public, because we can use that $1 billion for health care, for education, for helping our veterans, for a number of important priorities in this budget.

And we will have some type of a financial standoff here in a few months, yet we let $1 billion escape our grasp. I urge a ``no'' vote on the bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I ask unanimous consent to give Members 5 legislative days to revise and extend their remarks on this bill, H.R. 3056.

Mr. Speaker, I yield myself such time as I may consume.

We are in a time where there is a complete fascination in this administration with contracting out. If you are happy with Blackwater in Iraq, then I expect you are perfectly fine with contracting the debt collection of IRS debt to private bill collectors. But there are some essential facts at issue which should give us pause to reconsider.

First, the start-up costs. We were told, in testimony by the IRS Commissioner, this venture was going to cost about $14 million to get up and running. The tab so far, $70 million, five times the anticipated cost to begin this venture.

Now, you might say, well, okay, start-up costs are a little more than expected, but how are we doing on receipts now that we have got them fully going, collecting these receipts? We don't have a very good story on that one either.

It was anticipated that $46 million to maybe $63 million would be collected. Coming in at about half of that anticipation, $32 million in. It costs five times more to start and bringing in about half as much as advertised.

Well, okay, $32 million. It still sounds like a lot. Well, not really when you consider the fact they have been given 118,000 cases with an unpaid debt of $512 million. For the kind of money we have invested, do you know what we are getting back? We are getting about a 6 percent return from this experiment in private debt collection.

You might be asking yourself, look, there must be some more efficient way to do this. Well, there sure is. Let's fund the IRS, hire, train, manage the debt collection. My gosh, if there is one government responsibility, it ought to be in making certain that the revenue owed is the revenue raised.

And the statistics show by the IRS themselves that for $1 spent on IRS staff collecting debt, you get a 20 to 1 return, $20 back for every $1 spent. Private debt collection, the IRS again projecting, at best, $4 back for every $1 spent. That's $20 if we hire to $1 spent, $4 if we hire to every $1 spent under contracting. And that's their projection.

Look, at $32 million collected and $70 million spent, we are collecting 50 cents for every dollar spent so far. That's pretty bad business. If we had spent the $71 million to hire a Federal collection staff, we would have already collected $1.4 billion. That is the total amount they project over 10 years under this experiment of private debt collection.

I sit on the Ways and Means Committee. And as we considered this notion before it became operative, I thought this is the most expensive way to do this. It reminded me of that $600 toilet seat that the Department of Defense paid for awhile back. I call this a $600 toilet seat of tax collection. Well, when you look at it, they have taken $70 million to build this gold-plated throne and they flushed away $50 million on this foolish experiment.

There are many reasons to end this ill-advised endeavor, and the speakers we present are going to offer those reasons. But the fundamental is it's a matter of dollars and sense, and this don't make sense.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, the unrefuted data is that IRS collection with IRS staff is five times more efficient in terms of dollars received than contracting out. If we are worrying about IRS efficiency, do it on the staff model.

And I might say that their cost estimate about this bill contemplates that the IRS would hire no staff, would just forget hiring out contractors, hire no staff, and just walk away from them.

No. We have got a very different notion. We want to take the money we are sending to these private bill collectors and hire IRS staff that are going to collect on this five-to-one ratio. We have got a much better, more efficient model to address this issue of unpaid balances owed to the United States.

Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. Lewis).

Mr. Speaker, I yield 2 minutes to the gentleman from Oregon (Mr. Blumenauer).

We had hearing testimony on the survey that was referenced by my friend from Florida. Basically, the GAO testified that the survey was fundamentally flawed. Of 300,000 conversations that have taken place, 1,000 were the subject of the survey for getting taxpayer satisfaction, and the private debt collectors were able to pick which ones got the survey. So a 1,000 survey sample out of a 300,000 universe, with those stakeholders picking the ones that get to say it, was not deemed as credible by the GAO and not deemed as credible by the majority on Ways and Means.

With that, I yield 2\1/2\ minutes to the gentleman from New Jersey (Mr. Pascrell).

Mr. Speaker, the gentleman has spoken passionately about the jobs in his district, and I look forward to working with him on economic revitalization issues so vitally important to rural areas like the ones he and I both represent. But this is really not a jobs program before us. What is the best way for taxpayers to have collected what they owed? We want to collect what we are owed. We believe for every IRS employee, we are going to collect $20. For every private debt collector, the optimistic projection is you are going to collect $4. The reality has been much less than that. So when we are talking about the issue before us, what is the best way to get the money we are owed? The best way to do it is hire the personnel, train the personnel, run an IRS capable of getting its job done.

I yield 2 minutes to my friend from Nevada, Congresswoman Berkley.

Mr. Speaker, it is my pleasure to yield 4 minutes to the bill's prime sponsor, the gentleman from Maryland (Mr. Van Hollen).

Mr. Speaker, as part of the IRS appropriation, we fund the National Taxpayer Advocate. In her 2006 annual report, she writes, ``We are concerned that private collectors are using trickery, device and belated Fair Debt Collection Practices Act warnings to take advantage of taxpayers. We are concerned private collectors are taking advantage of taxpayers.'' That is from the National Taxpayer Advocate.

With that, I yield 2 minutes to the gentleman from New York (Mr. Serrano), who has advanced the prohibition of this ill-advised endeavor in the Appropriations Committee.

(Mr. SERRANO asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I would just again read from the National Taxpayer Advocate report: ``We are concerned private collectors are taking advantage of taxpayers.'' I will submit this for the Record.

With that, I will yield 1 minute to the gentleman from Pennsylvania (Mr. Sestak).

Mr. Speaker, the cost cited assumes that not a nickel is spent on IRS capacity. Indeed, if we spend it on IRS capacity, the unrefuted evidence is that it would be a 5-to-1 return relative to private collectors.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, we believe private debt collection of IRS debt is a terrible idea and an important matter, which is why the majority leader will close for our side. I yield the balance of our time to the majority leader, Mr. Hoyer, from Maryland.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I rise to claim the time in opposition to the motion.

Mr. Speaker, my friend is an articulate and forceful advocate. And we are all moved by the story of his time with the accountant, but they did not owe a tax. And basically, there is a figure missing from the motion to recommit he brings before us today, a very important figure: the cost of what the underlying motion to recommit would require. That figure is $498.8 billion. Now, we are a Nation of $9 trillion of debt, $9 trillion of debt, and they bring forward a proposal that would add another $498.8 billion, and they fail to say anything about how they are going to pay for it in their motion.

Well, obviously serious-minded legislators like my friend would not bring forward a serious proposal about repeal of the estate tax without some means of paying for it, and that is really what the heart of this motion is. It is not a real estate tax motion. This is a kill-the- underlying-bill motion.

The other side has some different priorities. Last week they were against SCHIP, expanding health insurance to uninsured kids. This week they are basically for privatizing debt collection of IRS debt. You like what Blackwater is doing in Iraq; you're going to love sending IRS debt to private bill collectors here.

Because they aren't going to prevail on the debate itself, they want to keep the vote from happening at all, which is what the underlying motion to recommit does, sends it promptly back to the Ways and Means Committee, which means the underlying bill is not before the House for a vote.

Mr. Speaker, to further use the time in our opposition to the motion to recommit, it is my honor to yield to the chairman of the Ways and Means Committee, Mr. Rangel from New York.

Mr. Speaker, I yield back my time.

Mr. Speaker, I rise in strong opposition to the bill before us today. I thank the ranking member of the Ways and Means Committee for his ongoing efforts to defeat this misguided proposal and other members of the Ways and Means Committee who have also carried a strong voice, such as the gentleman from Texas.

For some Members of this body and both sides of the debate, this issue is simply about policy. We understand that. For them, it is an abstract question about whether private collection agencies or so- called PCAs should be able to play a limited, supplementary role in the IRS's efforts to collect delinquent tax debt. But for me and the area I represent in western New York, it is about both policy and much more than that. It is about jobs.

As a Member of Congress who represents rural Wyoming County in western New York, I am actually more familiar than most with the work that PCAs do. After all, the largest single private employer in Wyoming County is Pioneer Credit Recovery. It is one of only two companies nationwide that the IRS has selected to help get its important program underway.

Mr. Speaker, Pioneer Credit is a highly respected, local business that has created more than 1,400 high-paying jobs for families living in either my district or neighboring districts around Buffalo and Rochester. As my fellow members of the western New York's congressional delegation know, these jobs have been created in a region that has faced serious economic challenges. As I have listened today to this debate, sometimes you wonder just exactly who might be on that phone. These are highly trained rural folks coming from communities much like the gentleman from North Dakota has in North Dakota. It just happens to be a rural area of a large State of New York. For some people, that is their only income to the household. For some it is a supplement to farm income or manufacturing income. And I have looked at some of these people I have known for years. I have seen some of these people where I have just met them the day they went to work to have a meaningful job, after maybe a manufacturing shop closed down in Wyoming County. Or they weren't able to stay on the family farm.

But they are hardworking, decent people who subscribe to Federal and State laws that this honorable body actually has set forth in the past that deliberated and said, you will function as collectors. I know one thing about the people's House: We have had a lot of people from a lot of different backgrounds, but you know, as a small businessman myself, I promise you the only time I send out, in the days I was in business, to a private collection agency was when I couldn't collect that money for an insurance premium or commissions owed and I had no other recourse but to look in private collection. They professionally got the job done to bring back money that was owed.

As my colleague, Mr. Brady, has pointed out, the IRS sometimes had four chances to kind of get this money and still didn't come back with it. We looked at an opportunity, could we gain over 10 years over $1 billion in order to increase the revenues or address the tax gap that my colleague from Florida talked about.

So when the IRS contract was allowed to Pioneer Credit to turn an empty warehouse in Perry, New York, into a thriving job center for newly hired employees, it has been a great economic success story for part of western New York that desperately needed it, and it began to produce the results that the Congress and the IRS expected. So as someone who has fought to give the IRS the authority to partner with these private companies in the first place, I am deeply troubled that the new majority is now threatening to deauthorize this important program just as it gets underway. If this program is allowed to continue, Pioneer Credit will be given the opportunity to compete for future IRS contracts that could create many additional jobs in the area I represent. Killing this program, on the other hand, would cost my constituents real jobs at a time when Congress should be working to expand employment opportunities, particularly in hard-hit areas that are struggling economically.

I would also note, Mr. Speaker, that under the Democrats' PAYGO rules, proposals that reduce anticipated Federal revenues must be offset by other provisions that raise revenue. Thus their proposal to eliminate the PCA tax collection program, which is expected to net at least that billion dollars over the next decade, also requires them to raise $1 billion in new taxes somewhere else.

This bill is wrong on policy. It is wrong on job creation. It is wrong on tax hikes. I urge a ``no'' vote.

Mr. Speaker, this won't be the first or last time that debate on the floor comes on disagreements of policy or well-crafted rhetoric that goes to the extreme of bringing forth one's position. But I think that my colleague, Mr. Brady, and others who have spoken in the aspect that private collection has worked in the portion that has been assigned in their mission as they get underway, that the complexity of collecting taxes of the tax gap, which, if you recognize the tax gap as a challenge of revenue, one that this Congress very quickly and gladly put forth, that $1 billion of collections through private collection agencies would be achieved, and as we now embark on that, we have listened to tough language and rhetoric, and I sat through most of those public hearings, crafting today the reflection of what they thought they heard in those hearings. I think that if we look at results as we move towards the opportunity of seeing private collection, because one thing that has been omitted, if I am not mistaken, regardless of what this body does, the other body will have a serious challenge in seeing legislation passed, and there is a Presidential veto that says that it will not occur.

So as we measure in the future the work that has been done that has been assigned to the PCAs, and we look at the aspect of a goal that all of us would have, that the IRS has tools to do their job so that collection continues, I think we will also see in short time that private collection agencies have done the mission they were asked to do in the pilot out in Iowa and in western New York, and I think as we give that a chance, not only will this legislation not be needed, but it will not see the light of day.

Mr. Speaker, I yield myself such time as I might consume.

I'm pleased that the chairman and I have forged a good working relationship. That relationship has allowed us to work together on several important issues, including trade and some tax bills. Just last week, for example, I stood on the floor and joined with the vast majority of Members on both sides of the aisle to approve a bill helping relieve homeowners of the tax burden that comes with having a mortgage written down or foreclosed.

But the chairman and I know that there are times when we will not agree, and today is just such an occasion. The central feature of this bill is a repeal of a program at the Internal Revenue Service that allows the service to contract with private collection agencies, known as PCAs, to secure payment of unpaid taxes from individuals who have admitted they owe the government money, but simply have not actually paid the money.

It's true, as the majority likes to argue, that the IRS's own taxpayer advocate has urged Congress to repeal the PCA program. But some of her reasons are a bit suspect. For example, her report criticized the use of private collection agencies because, by doing so, ``the IRS has separated taxpayers from its world class customer service.''

And while I agree that IRS employees are competent, hardworking public servants, and I commend them for the job they do, surely the person who wrote that did so with tongue firmly planted in cheek. After all, how many of us, in conversations with our constituents, have heard from them that the IRS is known for their customer service?

More importantly, though, IRS reviews of the PCA program show that customer service satisfaction with those PCA programs is, in fact, very high. In their comments on the taxpayer advocate's report, the IRS noted that ``of the nearly 19,000 cases assigned to PCAs, only 108 taxpayers have requested that their accounts be handled by the IRS. There have been 31 reported contractual complaints, all of which have been reviewed in depth. There have been no instances of fraud or misuse of taxpayer information.''

That record is not surprising, considering the extensive training PCA employees receive and the limited information they are provided. That, I should point out, stands in sharp contrast to the many documented lapses of the IRS in protecting confidential taxpayer information.

Program opponents often suggest that there is something intrinsic about tax collection that should preclude it being contracted out to the private sector. This argument is hard to reconcile with a few basic facts.

First, the PCAs are not adjudicating tax liability. They are merely helping to ensure the government receives the amounts the individuals have already admitted they owe in taxes but have not paid.

Second, PCAs are used throughout the Federal Government to collect unpaid obligations. According to the IRS, since 1982, PCAs have been used by various branches of the Federal Government, collecting nearly $700 million in fiscal year 2005 alone.

Third, of the 43 States with a personal income tax, the vast majority of those use private agencies to help collect from delinquent taxpayers.

A hearing on this issue showed the members of the committee the skill and patience PCA employees use to avoid disclosing any confidential taxpayer information.

In fact, Mr. Speaker, I would urge the PCA program be modified to provide these contractors with additional tools that will both improve their recovery rate and reduce the possibility of taxpayer confusion about the purpose of calls and letters from the PCAs.

Even though these agencies lack many of the tools of the IRS, such as lien and levy, they are successfully collecting millions of dollars in unpaid taxes that the IRS has not and very likely would not ever get around to collecting.

The majority will no doubt argue that the cost to the taxpayers would be even less if the IRS went after these obligations. But the fact is they are not, and any such comparisons are apples to oranges. The IRS is currently ill-equipped to engage in the massive outbound call operation the PCAs use to collect these obligations.

In the first year of the program's operation, more than 90,000 cases have been placed with the PCAs. More than 7,300 have resulted in full payment, and more than 2,600 taxpayers have entered into installment agreements. The PCAs have already collected $32 million in gross revenue that would not have been collected otherwise, making this a tax-gap closing program with a proven track record. The Joint Tax Committee estimates that killing this program will result in the loss of over $1 billion in revenue over the coming decade.

Considering the difficulty of meeting the terms of PAYGO, it's rather disappointing that the majority would actually find it necessary to raise taxes elsewhere in order to terminate a program that is helping to close the tax gap. In fact, during committee markup, members of the Ways and Means Committee suggested a number of ways to use the money that the majority is spending today by killing this program, including delaying the implementation of a withholding rule on Federal contractors or providing penalty relief to taxpayers who are underwithholding their 2007 taxes because they are unaware of the coming hit of the AMT, which the majority has yet to pass, but I'm sure that we will get around to that. Unfortunately, those amendments were rejected on party-line votes in the committee, and, of course, we are not being given a chance to vote on those today in this House.

Mr. Speaker, at this time I yield the balance of my time to Mr. Brady and ask unanimous consent that he be allowed to control that time.

Mr. Speaker, I rise today in support of H.R. 3056, the Tax Collection Act of 2007. This legislation will amend the Internal Revenue Code of 1986 to repeal the authority of the Internal Revenue Service to use private debt collection companies, to delay implementation of withholding taxes on Government contractors, to revise the tax rules on expatriation, and for other purposes. I would like to thank my colleague, the distinguished chairman of the Ways and Means Committee, Mr. Rangel, for introducing this legislation, as well as for his leadership in bringing this important issue to the floor today.

Mr. Speaker, this legislation strengthens Government accountability and protects taxpayers and confidential tax information. It will repeal the IRS's authority to enter into, renew, or extend contracts with private companies to collect Federal income taxes. Currently, the private debt collection program exposes taxpayers to harassment, wastes tax dollars by paying a bounty of up to 24 percent to debt collectors, and jeopardizes long-term taxpayer compliance. The collection of Federal income taxes is an inherently governmental function that should be restricted to IRS employees. Furthermore, the use of private contractors violates the special and confidential relationship between taxpayers and the Federal Government, and could jeopardize the privacy of taxpayers, possibly undermining long-term taxpayer compliance. In addition, private debt collection is an extremely inefficient way to collect Federal income taxes.

Since the authority to enter into private debt collection contracts was first granted in 2004, the Federal Government has spent $71 million to collect a net of $20 million in tax receipts. If this money was spent hiring IRS employees, the National Taxpayer Advocate estimates the Federal Government could have collected $1.4 billion. This provision is estimated to cost $1.054 billion over 10 years.

In addition, this legislation delays the application of the withholding requirement on certain governmental payments for goods and services. For payments made after December 31, 2010, the Code requires withholding at a 3 percent rate on certain payments to persons providing property or services made by Federal, State, and local governments. The withholding is required regardless of whether the government entity making the payment is the recipient of the property or services, those with less than $100 million in annual expenditures for property or services are exempt. Numerous government entities and taxpayers have raised concerns about the application of this provision. The provision would delay for 1 year, through December 31, 2011, the application of the 3 percent withholding requirement on Government payments for goods and services in order to provide time for the Treasury Department to study the impact of this provision on government entities and other taxpayers.

Mr. Speaker, this legislation stops the tax benefits for expatriates who renounce their citizenship. U.S. citizens and long-term U.S.

residents are subject to tax on their worldwide income. Taxpayers can avoid taxes by renouncing their U.S. citizenship or terminating their residence. It would immediately impose a tax on these individuals, strengthening current law to ensure that certain high net-worth taxpayers cannot renounce their U.S. citizenship or terminate U.S. residence in order to avoid paying taxes. Under this provision, high net-worth individuals will be treated as if they sold all of their property for its fair market value on the day before such individual expatriates or terminates their residency. Gain will be recognized to the extent that the aggregate gain recognized exceeds $600,000, which will be adjusted for cost of living in the future.

Finally, H.R. 3056 increases information return penalties. This provision would increase the penalties for failing to file correct returns, failing to furnish correct payee statements, and failing to comply with other information reporting requirements. If a taxpayer fails to file a correct information return before August 1, current law imposes a $50 penalty. This bill would increase this penalty to $100 per information return, with a maximum penalty of $600,000 per calendar year, $250,000 in the case of small businesses. Where a taxpayer files a correct information return after the filing date but before 30 days after the filing date, the current law $15 penalty will be increased to $25, with a maximum penalty of $200,000 per calendar year, $75,000 in the case of small businesses.

Where a taxpayer files a correct information return more than 30 days after the filing date but before August 1, the penalty for information returns will be increased from $30 to $60, with a maximum penalty of $500,000, $150,000 in the case of small businesses. The provision is a scaled-back version of the Treasury Department's proposal to increase penalties on failures to provide information returns.

Mr. Speaker, we can reduce the tax gap and make sure that taxpayers pay their fair share by having the IRS collect unpaid Federal taxes compared to private debt collectors. The American people demanded a new direction for America in the 2006 elections, and I believe that Congress must stand up for the American taxpayer. The current program's practice of giving unaccountable private contractors unfettered access to the personal financial data of American citizens poses an unnecessary and unacceptable risk.

Mr. Speaker, I urge my colleagues to join me in support of H.R. 3056, the Tax Collection Responsibility Act of 2007.