Senators Introduce Bill Requiring Federal Employees to Pay Tax Debts

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A pair of senators have introduced a bipartisan bill that would suspend federal employees if they willfully neglect to pay their taxes.

Senators Tom Coburn, R-Okla., and Mark Pryor, D-Ark., introduced the bill Thursday, which would prohibit the federal government from employing those with seriously delinquent tax debts. 

The proposed legislation would require all federal employees to be current on their federal income taxes, and would allow for the termination of any worker with seriously delinquent tax debt. In addition, any individual in debt to the government because of unpaid federal taxes would be ineligible for employment with the federal government.

“Instead of using the power of the state to silence and intimidate political opponents, the IRS should be focused on collecting taxes from people who are delinquent,” Coburn said in a statement. “This bill helps fill a gap created by the IRS by prohibiting the federal government from employing tax cheats. It’s wrong to force American families to fund the paychecks of federal employees who don’t feel like paying their taxes. While most federal employees are hard-working and responsible citizens who pay their taxes, others are not.”

He and Pryor noted that the bill would help federal agencies avoid issuing indiscriminate furloughs by favoring employees who pay their taxes.      

“In today’s tight budget environment, we need to ensure that we’re getting the most bang for our buck,” said Pryor. “Taxpayers shouldn’t be asked to foot the bill for federal employees who are delinquent. These employees—like the rest of America—need to pay their taxes or face the consequences. Our common-sense bill helps us meet this goal.”

The legislation would make ineligible for federal employment any individual who has a “seriously delinquent” tax debt, which would be defined as “an outstanding debt under the Internal Revenue Code of 1986 for which a notice of lien has been filed in public records.” Exceptions would be made for a tax debt that is being repaid under an agreement with the IRS, as well as tax debts subject to a collection due process hearing.

The bill would require the Office of Personal Management to prescribe a regulation for carrying out the bill, including authorizing each agency to establish an appeal process for affected individuals. Agencies would be encouraged to establish a process to allow affected federal employees a full review before termination for owing back taxes.

According to the senators, the legislation would only apply to federal workers who have willfully neglected to pay their incomes taxes and would exclude federal employees from suspension if there is a good faith effort on their part to pay up.

The bill would exclude federal employees from suspension if the individual is currently paying their taxes, interest and penalties owed to the IRS under an installment plan; the individual and the IRS have worked out a compromise on the amount of taxes, interest and penalties owed and the compromise amount agreed upon is being repaid to IRS; the individual has not exhausted his or her right to due process under the law (a broad exception that references administrative or judicial remedies); or the individual has filed a joint return and successfully contends that he or she should not be fully liable for the taxes, interest, and/or penalties owed because of something that the other party to the return did or did not do.

The Internal Revenue Service already disciplines employees with seriously delinquent tax debt, the senators noted. At the IRS, delinquent tax debt is grounds for termination. The senators contend that other federal agencies should similarly apply strict standards to employees who fail to pay their taxes.

According to the most recent IRS data, as of 2011, more than 311,000 current and former federal employees owed more than $3.5 billion in unpaid federal taxes, an 11.5 percent increase in the delinquency rate of federal employees from 2010, in which the rate also increased from 2009.

Of the nearly 312,000 employees with tax debts, 107,658 were current civilian federal employees owing $1.013 billion in unpaid taxes, while 141,980 were military and civilian retirees owing $2.1 billion.

The IRS data indicated that 2,552 employees in the Department of Justice owed more than $20 million in back taxes. The Department of Health and Human Services had a delinquency rate of 4.03 percent, as 3,454 employees owed the government $44.6 million. In addition, 22,404 employees of the U.S. Postal Service owed more than $215 million in delinquent taxes, while 2,453 employees of the Social Security Administration owed more than $22 million in back taxes. The Smithsonian Institution’s delinquency rate was more than 6.6 percent, as 328 Smithsonian employees owed more than $3 million in taxes.

In Congress and the executive branch too, there were employees with substantial tax debts. As of 2011, 688 employees of the House and Senate owed more than $10 million in taxes. Similarly, 40 employees in the Executive Office of the White House owed $333,485 in unpaid federal taxes.

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