Iowa based CBE Group is a privately owned accounts-receivable management company. One of its clients is the federal government, who uses the CBE Group and two other similar companies to collect delinquent taxes.
These companies were awarded government contracts in 2006, which allowed them to attempt to collect back-taxes that the IRS was not actively pursuing. CBE and the other firms are compensated by keeping 22 to 24 percent of the delinquent tax money they collect.
While the contracts were awarded in 2006, full implementation of the program was to occur in 2008. With a new, union-friendly administration in place, the National Treasury Employees Union has successfully lobbied Congress to include language in the Omnibus Appropriations Act that would do away with this program.
If the bill is passed, at least 60 jobs will be lost. When CBE was awarded the contracts, company president Tom Peneluna said that the program would need to employ 200 people once fully operational.
Last week, Congressman Braley and Congressman Boswell, who represent areas where CBE Group has offices in the state, failed to convince their collogues to remove the provision from the bill that would eliminate the program. Both Braley and Boswell then voted for the bill. As the bill made its way to the Senate, Senator Grassley and Senator Harkin asked Secretary of the Treasury Tim Geithner to spare the program and allow it to be fully implemented.
Last night, Grassley sent out a memo saying that Geithner told him that the program would be eliminated.
Grassley released the following statement, “The administration has decided that after spending nearly a trillion dollars in the stimulus bill to keep people working across the country, they are going to cut a program that provides jobs to hundreds of people during the middle of a recession, including 60 in Iowa. It’s hard to believe that after worrying so much about keeping people employed, the administration has chosen this route. I told the Secretary that they could hire all the people they wanted for the NTEU, but the IRS was never going to get the money that was owed to the federal treasury because IRS policy is to not go after debts under a certain amount.”
The National Treasury Employees Union has been opposed to the program since its conception. They argued since these companies are paid based on the money they collect, they will use much more aggressive tactics than IRS employees. However, as Grassley pointed out, the IRS was never even going to attempt to collect these types of back taxes. The NTEU is the largest federal-sector union in the country.
blog comments powered by Disqus