The Baseball Clause
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The IRS Hires Bounty Hunters


When Reps. Shelley Moore Capito (R-W.Va.) and Chris Van Hollen (D-Md.) teamed up in September to get the House to pass an amendment blocking the use of private companies to collect back taxes from delinquent taxpayers, it seemed the Bush administration plan might be doomed for at least a year.

But in the final hours of drafting a 3,300-page spending bill last month, House and Senate negotiators eliminated Capito's and Van Hollen's handiwork, clearing the way for the Internal Revenue Service to hire commercial debt collectors. These private agents could keep as much as 25 percent of the amounts they recovered.
Under the legislation, contractors will ... be given names, addresses, phone numbers and other identifying information about delinquent payers.

You might be wondering, "What's your problem, Mike?  The government here is merely using a more efficient means to collect debt it's legally owed."

My problem with this scheme is that it involves the government using data collected under color of law and then sharing this data with private companies not bound by constitutional procedures.

We do not "share" our private information with the IRS.  The IRS obtains this information on your tax return under threat of law.  If you do not give the IRS personal information that you otherwise might keep private (e.g., your address and telephone number), you risk going to jail.

Here, the IRS is taking this information and giving it to a private company not bound by the Constitution in its treatment of you.  If an IRS agent "crosses the line," you might be able to bring a Bivens action (an implied right of action brought under the Constitution against the federal government) against him or her.  But if a collection agent crosses the line, he or she is probably not liable under Bivens, although I imagine fair debt practices would apply to these agencies conduct.

Moreover, even if the collection agent is liable under a joint-action theory of acts done under color of law, the collection agency most likely would not be.  As Geoffrey Segal notes here, the lack of person who is not judgment proof (i.e., the agency rather than the $8/hr. collection agent) means such suits will not likely be brought.

Thus, I oppose the IRS's new collection scheme because the collection agencies obtain personal information obtained under color of law without being bound by the same rules that woud apply to an IRS agent's collection process.