Bold Changes in Regulatory Trajectory? - A Look at the First Days of the Trump Presidency
1/23/2017 7:49 AM
President Trump orders a regulatory freeze until further notice and Treasury Secretary-designee Steven Mnuchin answers questions pertinent to the credit and collection industry.
Hours after Donald John Trump was sworn in as the 45th President of the United States, Press Secretary Sean Spicer notified reporters of one of the President’s first actions - a memorandum sent that evening from White House Chief of Staff Reince Priebus to all executive federal agencies and departments ordering a regulatory freeze until later notice.
The reason for the freeze: “In order to ensure that the President's appointees or designees have the opportunity to review any new or pending regulations,” according to the memo.
Regulatory freezes are common by new presidencies after a party shift. In January of 2009, former President Barack Obama ordered a similar freeze to pending regulations from the George W. Bush administration.
This time around, Trump’s move to order the regulatory freeze could be a strong indication of what may be the start of a major shift in federal regulatory policy. For their part, Republican lawmakers are poised to push Congress to unravel Obama’s most vexed regulatory rules.
One day prior to Inauguration Day, the U.S. Senate Finance Committee held a confirmation hearing for Steven Mnuchin, President Donald Trump’s nominee for secretary of the U.S. Treasury Department, where he fielded questions about the Internal Revenue Service’s private debt collection program in effect starting this year.
U.S. Sen. Orrin Hatch (R-Utah) said in his opening statement that, “the next Treasury Secretary will be tasked with advancing policies that will improve our nation’s economic and fiscal outlook. The position oversees both the collection of taxes and the management of our debt.”
Mnuchin, during statements from U.S. Sen. Chuck Grassley (R-Iowa), was charged with ensuring the Internal Revenue Service’s private tax debt collection program would be implemented properly.
Grassley was instrumental in the inclusion of a provision requiring the IRS to use private debt collection agencies to recover unpaid tax debt in the Fixing America’s Surface Transportation (FAST) Act – a five-year highway funding bill.
“I’ve been a strong proponent of the IRS’s private debt collection program as has [U.S.] Sen. [Chuck] Schumer. In 2015, Congress … updated and made mandatory the IRS private debt collection program,” Grassley said during the hearing. “This program is designed to chip away at the tax gap by requiring the IRS to contract with private debt collectors to collect inactive tax debt owed. These are the tax debts not being worked by the IRS and absent this program would likely never be collected, adding up to $187 million in 2017. Out of that $187 million the Treasury Department has provided debt collectors to collect a net of $8 million. This certainly is not due to the lack of inactive tax debt available for the IRS to assign. According to the Government Accountability Office report, the IRS has over $130 billion of outstanding debt on its books, so hamstringing this program by refusing to release inactive debt for the program ought to be considered unacceptable by anybody.”
Grassley then asked Mnuchin, “Can you give me assurances that the Department of Treasury under your leadership will work to implement the program to the full extent of authorized law and bring in this tax money that’s not being collected?”
In response, Mnuchin said, “I think that most aspects of taxes should be handled by the IRS, but as you’ve described, to the extent we have $100 and plus billions of receivables that are just sitting there … I agree with you, seems like a very obvious thing to do.”
The IRS announced in September 2016 the four private debt collection companies it has chosen to contract with as part of a new program for collecting overdue federal tax debt.
Starting in spring 2017, the companies in the program will collect money on accounts the IRS is no longer actively working on, according to a news release from the IRS. Under the new law, the IRS must use private collection agencies to collect “inactive tax receivables.”
As an added measure of accountability, the law stipulates the IRS must present two reports to Congress detailing the effectiveness of the program, ACA previously reported. One report would focus on the total amount of tax receivables outsourced to private collection agencies, the total amounts collected by these agencies and the subsequent costs incurred by the IRS. The second report is an independent performance evaluation of the agencies contracted with the IRS; it will include a comparison of best practices between the IRS and private collection agencies.
Mnuchin’s nomination will likely be considered by the full Senate this week.
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