The Efficacy of the IRS's Automated Collection System

The Automated Collection System – what is it? The Automated Collection System (ACS) handles Integrated Data Retrieval System (IDRS) balance due and non-filer cases needing phone contact for resolution. Suffice to say, taxpayers who owe the IRS money is a major IRS problem, and the ACS contacts these taxpayers via its computerized network.

ACS was created in the 1980s to combat a huge IRS issue of delinquent taxes and allow IRS employees to contact taxpayers via phone and/or mail and to handle the collection of taxes. Tax examiners also utilize the system to examine certain cases and issue notices, levies, or liens in order to fix the tax debt. Specific data is stored in the system, which includes taxpayer information pertaining to delinquent accounts or returns, and audit information, which includes every step taken in a particular case.

Every item of information that is stored in the ACS is supported by other means, like bank statements, corporate files, court records, and by contacting creditors. Checks for validity and consistency are built into the system.

Is the Automated Collection System used by the IRS an effective way to collect taxes owed? To determine if privatization or the ACS is the most efficient method of tax collection, a congressional hearing was held recently.

An IRS National Taxpayer Advocate, Nina Olsen emphasizes that ACS is less expensive than privatization. Private collectors collect up to 24% in commissions, but only bring in net revenues of $11 million while the program costs $12 million every year to use.

In comparison, if $7 million were put into the Automated Collection System, then the revenues could total from $91.8 million to $145 million with no costly commissions. The government spends about $81 million a year by privatizing collection.

The IRS's reason for outsourcing is because they cannot afford to employ more debt collection officers. To decide which is a more effective method, however, they are regaining control of some cases and handling them in-house.

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

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

Using the ACS is more cost effective, compared to private debt collection. Through the work of IRS officers, the government has the opportunity to recoup revenues.

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