House Democrats, shrugging off a presidential veto threat and GOP opposition, won passage of legislation Tuesday that would kill an IRS program under which private debt-collectors are used to dun scofflaws.
The provisions were included in a bill, approved 238-179, to simplify the tax system. It would eliminate the requirement that people keep detailed records of calls made on employer-provided cell phones, would stop federal contractors from using foreign subsidiaries to evade Social Security and other employment taxes and would require that the IRS notify taxpayers if it suspects identity theft.
It also requires the IRS to do more to ensure that lower-income people entitled to the Earned Income Tax Credit apply for and receive that credit.
The White House said two provisions in the bill, which now goes to the Senate, could subject it to a veto. One would require people to provide proof that any withdrawals from tax-free health savings accounts are used for medical expenses. The other would kill another administration priority, a program under which smaller-scale delinquency cases that the IRS would normally ignore are farmed out to two private debt-collection companies.
The White House cited estimates the program would bring in $578 million over the next 10 years. Critics said the program lost $50 million in its first year. They also cited concerns about possible misuse of confidential taxpayer information. “It’s a wonderful idea for a ‘Sopranos’ episode,” said Rep. Jose Serrano, D-N.Y.
This article appears in the April 19, 2008, edition of NJ Daily.