How Does the Automated Tax Collection System Work?

People are often confused about the workings of the automated tax collection system. So let’s talk about what this system does. The ATCS or the automated tax collection system takes care of the IDRES or Internal Data Retrieval System balance due and the cases of non filers that require telephone communication for the resolution of the issue.

To put the definition in lay man terms, the ATCS is a system that communicates with the tax payers who have defaulted on their tax payments. And this computerized system can pose a lot of problems. The ACS stores almost all the data on tax payers including details about their audits. This system was introduced in 1980 and after its introduction the tasks of providing notices to tax defaulters, examining cases and communicating with delinquent tax payers was assigned to the taxpayer examiners.

The ATCS supports every single piece of detail that has been uploaded to it; it contacts the creditors, collects court records, bank statements and corporate files; so basically, it has every single piece of information about your financial dealings. However, people often question the efficacy of this automated system in collecting taxes.

Most recently the ATCS was in debate because there was a congressional hearing to decide which offers the more effective and efficient mode of tax collection the ATCS or privatization. Most consume tax advocates and people who are set against privatization of such key portfolios believe that it would inappropriate to privatize tax collections so they support the ATCS which they also believe is the cheaper way out.

Nina Olsen; who was the Advocate for the IRS National Taxpayers argued against the privatization of tax collection citing the high cost of almost $12 million involved in this method. This cost included the commission of the private collectors which can go up to an astounding 24% of the total taxes collected. In the year 2008; these collectors were projected to bring in an extremely unimpressive amount of just as $23 million however, the government’s net revenue would be $11m.

On the other hand, the ATCS requires no commission payments and has only cost the government $7 million in investment. However, its collections have been impressive to the say the least at $91.8 to $145 million brought in by the system. This is certainly more cost efficient and effective than the $81 million government dollars which are invested in the privatization of tax collections.

The IRS on its part defends the outsourcing of the tax collection process complaining that it is understaffed to collect debt and it simply cannot afford the added expenditure of hiring more tax collectors. However, they have decided to regain control of some of the cases so that they determine the efficacy of both methods.

Colleen Kelley, a spokesperson for the National Treasury Union Employees testified at the congressional hearing stating that the union that certainly does not deny the fact that hiring outside collectors (outsourcing tax collection) is the more expensive option than getting the work done by a qualified and trained IRS employee. Also opting for the former increases the risk factor associated with the providing extremely sensitive information about an individual to private companies.

Kelley, further went on record stating, that IRS employees were not only efficient but also presented a more cost effective way of tax collection with each IRS tax collector costing the US government 40 cents for ever $100 that they collect. In such a case there is certainly no reason to bring in private collectors.

In conclusion, most tax payers and experts believe that the ACS is better than private debt collection agencies. And that instead of letting private collectors handle the matter, the government can actually recoup revenues by letting IRS employees handle the job. If you have any questions related to the ATCS system or tax regulations; it is imperative to get in touch with a Dallas tax attorney or a qualified tax accountant at the earliest.