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Plan to turn certain tax debts over to private collectors could hurt Obamacare

NY State Senator Chuck Schumer proposed the provision.
Official Washington Portrait (public domain)

A new provision mandating the IRS to turn over millions of unpaid tax bills to private debt collectors has a number of people in the senate worried on how it would affect low-income taxpayers, as well as damaging the IRS’s job of administering the new Affordable Health care insurance program. The measure, which has been neatly tucked into a larger bill directed at renewing several expired tax breaks, would essentially mandate the Internal Revenue Service to turn millions of unpaid tax bills to private collection agencies if the agency is unable to locate the ower within a year, bringing back a program that had previously been plagued by complaints of harassment.

Among the people most likely to be targeted for harassment by over zealous collection agencies are liable to be heirs responsible for unpaid estate taxes as well as people who incur penalties for not buying insurance under the Affordable Health Care act, as well as those who received IRS subsidies that were “too generous.”

Among those most concerned about the outsourcing is Nina Olson, the country’s taxpayer advocate, who has written to Congress urging them to withdraw the proposal. Among the things she is most concerned with is “if debt collectors come to be the face of President Obama’s healthcare program, it could make it more difficult for the IRS to administer it in the long-run.”

The proposal, which was initiated by Senator Chuck Schumer (D-NY), who’s state is the home of 2 out of the 4 private collectors who stand to gain by the change, is expected to win bipartisan senate approval this week. However, it is unlikely it will reach the President’s desk anytime soon due to continuing disputes within the House over renewing the tax breaks that have expired under the larger bill.

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