Is the IRS's Automated Collection System Efficient?

What's the Automated Collection System? Controlling IDRS (Integrated Data Retrieval System) non-filer and balance due cases that require communication via telephone is the ACS (Automated Collection System). Suffice to say, taxpayers who owe the IRS money is a major IRS problem, and the ACS contacts these taxpayers through its computerized network.

Data saved in the ACS include taxpayer and audit details. This was developed in the 1980s to provide taxpayer examiners an opportunity to communicate with delinquent taxpayers, examine cases, and issue notices.

Every item of information that is saved in the ACS is verified by other methods, such as bank statements, corporate files, court records, and by contacting creditors. The system is built with checks for consistency and validity.

The question remains if the ACS is an effective method to collect taxes. A hearing to decide if private methods were better than the ACS was held by congress.

An IRS National Taxpayer Advocate, Nina Olsen emphasizes that ACS is less costly than privatization. The private program costs $12 million each year to utilize plus commissions of up to 24% with net revenues of only $11 million.

The ACS, on the other hand, can bring in revenues of $91.8 million to $145 million with just $7 million in investment and no commissions. As opposed to the privatization of collections that cost the government $81 million per year, this is more feasible.

On the flip side, the IRS reasons that it has resorted to outsourcing because it can't afford to hire more revenue employees to address the IRS issue of debt collection. They're currently addressing in-house particular cases they regained from private collection firms to test the effectiveness of the method. They intend to determine which method is more effective by comparing the outcomes.

The use of private collectors, rather than hiring revenue employees puts at risk taxpayer information and is more expensive, according to Colleen Kelley, NTEU, or National Treasury Employees Union, president.

Kelley also stresses that IRS officers are the most cost effective tax collectors in the United States, costing only 40 cents for each $100 collected. She states that with this resource, there is no need to outsource to private debt collection.

Compared to private debt collection, utilizing the ACS is more cost effective. With the work of IRS officers, the government has the opportunity to regain revenues.