It used to be if you owed the federal government back taxes you’d be contacted by either the U.S. Internal Revenue Service itself or a private debt collection agency.

Going forward you will only be contacted the IRS. Citing a cost effectiveness review, the IRS announced today that it isn’t renewing debt collection contracts with private agencies.

The agency’s commissioner said he believes the agency’s own staff can do the job better because by law they have more flexibility in dealing with tax payers. He said he’s encouraged his staff to work with financially distressed tax payers.

The agency plans to hire more than 1,000 people in fiscal year 2009 to help with debt collection efforts.

The commissioner also said the decision had nothing to do with the performance of the two private debt collection companies that the IRS had hired within the past year.

March 5, 2009.