Privatised tax collection

From Wikipedia, the free encyclopedia

Privatised tax collection occurs wherever the state passes on its obligation to collect taxes to private companies in return for a fee. This contrasts with tax farming where private individuals or groups pay off the tax debt, and then subsequently recoup that payment by collecting money from the people within a certain area.

A modern example of a variation of tax farming is the United States IRS outsourcing of the collection of taxpayers' debts to private debt collection agencies. In September 2006, the IRS began to outsource the collection of taxpayers debts to private debt collection agencies. Opponents to this change note that the IRS will be handing over personal information to these debt collection agencies, who are being paid between twenty-two and twenty-four percent of the amount collected. Opponents are also worried about the agencies being paid on percent collected because it will encourage the collectors to use pressure tactics to collect the maximum amount. IRS spokesman Terry Lemons responds to these claims saying the new system "is a sound, balanced program that respects taxpayers' rights and taxpayer privacy." Currently there are other state and local agencies that are using private collection agencies and have not had any problems.^[1]^[2]