More than 415,000 federal military and civilian workers and retirees owe nearly $2.3 billion in back taxes, and roughly another 138,000 workers didn’t file tax returns at all in at least one recent year, according to Internal Revenue Service data.
They are getting increased attention from the IRS, which sees the potential for both lost revenue and public wrath at public employees not paying their taxes.
The IRS’s count of federal employees who owe back taxes includes Postal Service and federal court workers. Data for executive branch workers was made available to the IRS by law, and the judiciary participated voluntarily. But the figures do not include past or present members of Congress or their staffs, because Congress declined to participate.
Overall, federal workers and retirees are somewhat better about paying their taxes than the general public. About 9 percent of taxpayers in the general public are delinquent, the IRS figures. Fewer than 7 percent of all federal workers were behind on their taxes as of October, though the delinquency rate at two agencies, Education and Housing and Urban Development, topped 9 percent.
The Treasury Department - the IRS’s parent had the best showing, with a 3.82 percent delinquency rate.
Government workers are required not only by law but also by government ethics rules to file returns and pay their taxes on time. But while the IRS can intercept the tax refunds of deadbeat dads, student loan defaulters or others who owe certain federal debts, it cannot simply grab the paychecks or pensions of delinquent workers and retirees.
Instead, the agency must pursue federal workers in much the same way it does ordinary taxpayers, with notices and other forms of due process, before it can resort to such seizures. Because of federal privacy laws, the IRS cannot, for example, simply tell the Agriculture Department that one of its workers is delinquent on taxes and demand payment.
Federal workers’ and retirees’ “rights are the same as anyone else’s. They are subject to the same collections procedures, have the same rights and appeals,” said Ronald S. Rhodes, IRS acting assistant commissioner for collections.
Rhodes said federal workers get in trouble much the way other taxpayers do - they get audited and owe more, or haven’t had enough withheld and can’t come up with the additional money by April 15. He said delinquency among retirees, for which there is no mandatory withholding on pensions, is much more common.
The agency has made a special effort to identify delinquent federal workers and retirees, and has flagged such cases for special attention. Revenue officers are instructed to pursue them until the taxpayer pays or an installment agreement is worked out. Failing that, the agency will “levy” (seize) paychecks, pension payments and the like.