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Federal employees owe $3.5 billion in unpaid taxes

U.S. Postal Service employees owe $215.2 million in unpaid taxes for 2011, the most of any federal agency. (AP Photo/David Goldman)

Jamie Forzato, wtop.com

WASHINGTON – From military personnel to postal workers, federal employees are on the hook for $3.5 billion in unpaid 2011 taxes, according to a report obtained by WTOP.

The amount is a nearly 3 percent increase compared to the year before.

About 312,000 employees owe the government a total of $3,519,410,517, according to the Federal Employee/Retiree Delinquency Initiative (FERDI) released on March 8 by the IRS. The total number of delinquent workers dropped between 2009 and 2010 but jumped more than 11 percent in 2011. The number of delinquent civilian taxpayers is the highest since 2005. Roughly 9.8 million people work for the federal government.

Even though the U.S. Postal Service shed 3,000 jobs after 2010, postal workers owe the most out of all federal departments and agencies. The report finds 22,404 delinquent workers owe more than $215 million in back taxes.

Top 10 Agencies and Departments that owe the most

U.S. Postal Service $215.2 million
Department of Veterans Affairs $142.9 million
Department of the Army $106.3 million
Department of the Navy $ 72.8 million
Department of the Air Force $56.5 million
Department of Defense $48.9 million
Department of Health and Human Services $44.6 million
Department of Homeland Security $44.1 million
Department of Agriculture $22.6 million
Social Security Administration $22.1 million

By the numbers

Congressional staffers have a $10.8 million debt, while 40 delinquent employees of the Executive Office of the President owe $333,485.

Retired civilian and military delinquent taxpayers failed to pay more than $2 billion. Active duty military service members have a $110 million tab. Military personnel can qualify for various tax extensions, exemptions and assistance. For example, military personnel serving in a combat zone can postpone filing taxes until 180 days after their last day in the combat zone. Those who qualify for these types of extensions are not considered “delinquent” and are not included in the reported data.

The Government Accountability Office, which investigates how the federal government spends taxpayer dollars, owes nearly $912,000 in unpaid taxes.

In the Executive Branch, the Department of Housing and Urban Development has the highest delinquency rate at 4.42 percent. Department of Veterans Affairs employees owe the most money – nearly $142 million. One in 100 workers at the U.S. Department of the Treasury, which includes the IRS, are delinquent – the lowest delinquency rate among the Executive Departments. They still owe more than $9.3 million in taxes.

The delinquency rate for the general public is 2.5 times higher than federal employees, according to the IRS. As of September 2011, the delinquency rate for active and retired federal employees and military personnel is 3.17 percent. The IRS estimates the delinquency rate for the general population is 8.2 percent.

The IRS puts a higher priority on pursuing federal employee tax cases so it’s more likely these cases will be resolved, according to an IRS spokesman. Most federal employees file correct tax returns, but cannot pay the full amount immediately. Others owe additional taxes after an audit adjustment and are unable to pay the balance. Like all taxpayers, federal workers can apply for a payment plan.

The data were obtained by the IRS through an annual match of internal W-2 records and does not include employees who are on a payment plan. The report comes one week after automatic sequester cuts went into effect. The Justice Department has already issued formal furlough notices.

Current legislation

Rep. Jason Chaffetz, R-Utah, re-introduced a bill in January that would make individuals with “seriously delinquent tax debts” ineligible for federal employment. Under current law, only IRS employees may be fired for not paying their taxes. But if the Federal Employee Tax Accountability Act of 2013 passes, delinquent federal employees could be terminated and applications from delinquent candidates could be denied. The bill would require each employee or applicant to “submit certification that such person does not have any serious delinquent tax debt.”

If there is a financial hardship, a federal worker could remain employed if “the continued service of such employee is in the best interests of the United States, as determined by a case-by-case basis.”

Last year, the Federal Employee Tax Accountability Act of 2012 passed the House 263-114 but it was never brought up for a vote in the Senate.

Find out more about military extensions from the Armed Forces’ Tax Guide and Tax Guide for U.S. Citizens and Resident Aliens Abroad.

Here is the Federal Employee/Retiree Delinquency Initiative for 2011:

FERDI 2011 by

Follow @WTOP on Twitter.


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