IRS Will Not Renew Private Debt Collection Contracts
WASHINGTON — After conducting an extensive review of the private debt collection program, including the cost effectiveness of the effort, the Internal Revenue Service will not renew its contracts with two private debt collection agencies, the agency announced today.
The IRS determined that the work is best done by IRS employees who have more flexibility handling cases, which is particularly important with many taxpayers currently facing economic hardship.
The current one-year contracts expire Friday.
“After a thorough review of this program, I have decided not to renew the contracts,” IRS Commissioner Doug Shulman said. “I believe this work is best done by IRS employees, and I believe we have strong support from the Administration and the Congress for increased IRS enforcement resources going forward.”
“After a thorough review of this program, I have decided not to renew the contracts,” IRS Commissioner Doug Shulman said. “I believe this work is best done by IRS employees, and I believe we have strong support from the Administration and the Congress for increased IRS enforcement resources going forward.”
Shulman also noted that the IRS anticipates hiring over 1,000 new collection personnel in FY 2009. These new employees would give the IRS the flexibility to make assignments based on the areas of greatest need rather than filtering which cases can be worked using contractor resources.
Shulman cited the results of a cost-effectiveness study of the private debt collection program. The study – supported by an independent review — showed that it is reasonable to conclude that when working similar inventory, IRS collection is more cost effective than the contractors.
IRS employees have a range of options available to them in attempting to resolve difficult collection cases that, by law, the private contractors do not have.
IRS employees have a range of options available to them in attempting to resolve difficult collection cases that, by law, the private contractors do not have.
“In these challenging economic times, I have asked all IRS employees to go the extra mile to help financially distressed taxpayers,” Shulman said. “IRS employees have more options available to them to resolve difficult collection cases.”
Shulman also said that the decision was in no way based on concerns over the performance of the two contractors affected, who performed according to the terms of the contract throughout.
“I have asked IRS officials to ensure that the ramp down is orderly, and that the IRS perform targeted outreach to any displaced contractor employees that would consider applying for positions at the IRS,” Shulman said.
“By investing in IRS employees to perform this collection work, we can be assured that we have all the tools available for helping taxpayers confronting complex situations,” Shulman said.
Can You Claim the Child Tax Credit?
Published by the IRS
With the Child Tax Credit, you may be able to reduce the federal income tax you owe by up to $1,000 for each qualifying child under the age of 17.
A qualifying child for this credit is someone who meets the following criteria:
A qualifying child for this credit is someone who meets the following criteria:
Age – Was under age 17 at the end of 2008
Relationship – Is your son, daughter, adopted child, stepchild or eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these individuals or other eligible person who lived with you all year as a member of your household
Citizenship – Is a U.S. citizen, U.S. national or resident of the U.S.
Support – Did not provide over half of his or her own support
Lived with you – Must have lived with you for more than half of 2008 (note that some exceptions to this criteria exist)
The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status:
Married Filing Jointly $110,000
Married Filing Separately $ 55,000
All others $ 75,000
In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.
If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim some or all of the difference as an “Additional” Child Tax Credit. The Additional Child Tax Credit may give you a refund even if you do not owe any tax. The total amount of the Child Tax Credit and any Additional Child Tax Credit cannot exceed the maximum of $1,000 for each qualifying child.
For more information see IRS Publication 972, Child Tax Credit, available from the IRS Web site at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Links:
Form 8812, Additional Child Tax Credit (PDF 56K)
Publication 972, Child Tax Credit (PDF 128K)
Form 1040 (PDF 176K)
Form 1040 Instructions (PDF 1,101K)
Form 1040A, U.S. Individual Income Tax Return (PDF 136K)
Form 1040A Instructions (PDF 428K)
Tax Topic 606
Form 8812, Additional Child Tax Credit (PDF 56K)
Publication 972, Child Tax Credit (PDF 128K)
Form 1040 (PDF 176K)
Form 1040 Instructions (PDF 1,101K)
Form 1040A, U.S. Individual Income Tax Return (PDF 136K)
Form 1040A Instructions (PDF 428K)
Tax Topic 606
Stacie's Tax Stuff 