IRS sends letters to federal employees about delinquent taxes

The Internal Revenue Service has been mailing out letters to federal workers saying they are among around 525,000 current and former employees who owe back taxes.

The IRS began mailing the letters last month, according to the Washington Post, and the letters could be used as a reason for firing the employees. The letters typically warn, in boldface type, "Urgent: You have an outstanding tax issue."

Below that, it says, "According to our records, you are one of approximately 525,000 current or retired federal employees who are noncompliant with respect to their federal tax obligations as of April 30, 2025." The notices urge them to contact a phone number or open their online account or visit the IRS payment portal to pay off their outstanding balance. It warns them they will be contacted directly if they do not resolve their tax obligations in a timely way.

The notices are stirring consternation and fears that they could be used as a pretext to make it easier to fire federal employees. The Office of Personnel Management recently proposed a rule adding new suitability criteria for federal employees, including "failure to comply with generally applicable legal obligations, including timely filing of tax returns."

The LT36 notices do not contain the amounts owed as is typical with tax notices, prompting suspicions from some recipients that they are scams. A 2023 report from the Treasury Inspector General for Tax Administration found that over 42,000 federal civilian employees repeatedly failed to file a tax return for multiple years, in an analysis of data from the Federal Employee/Retiree Delinquency Initiative.

At the time, the IRS was able to identify and discipline its own tax delinquent employees but could not share employee return information with other federal agencies due to Section 6103 of the Internal Revenue Code. However, those guardrails are coming down as the IRS has begun sharing taxpayer information with other agencies, such as Immigration and Customs Enforcement, prompting the departure of several high-level officials, including acting commissioner Melanie Krause in April.

Taxpayers who don't resolve their outstanding tax issues can be subjected to aggressive IRS collection measures as governed by the Federal Employee/Retiree Delinquency Initiative, noted the law firm Frost Law. Under FERDI, the IRS can garnish a taxpayer's wages, salaries, pension benefits and Social Security benefits using the Federal Payment Levy Program. It warned taxpayers not to ignore the LT36 but to act quickly to resolve their outstanding tax issues. Even taxpayers who are in a payment plan are receiving the notices in some cases, according to Thomson Reuters Checkpoint.