Federal Workers Owe Billions in Unpaid Taxes

By Mark Segraves
WTOP
Jan. 17, 2007

WASHINGTON - As the 2006 tax season approaches, the federal government is still trying to recover nearly $3 billion from its own employees who failed to file income tax returns for 2005.

More than 450,000 active and retired federal employees did not voluntarily comply with federal income tax requirements for the 2005 tax year, according to documents obtained by WTOP through the Freedom of Information Act. (2004 - 2005)

The total balance owed is $2,799,950,165.

The documents show that every federal agency has employees who failed to comply with federal tax laws.

Seventy-one employees in the Executive Office of the President, which includes the White House, owe $664,527 in taxes for 2005. About 20 of those employees have entered into an IRS payment plan, bringing the EOP balance down to $455,881owed by 50 employees.

The White House did not respond to repeated requests for comment.

In fact, about one third of the delinquent employees, or 149,500, entered into a payment plan, but the total owed is still more than $2 billion.

At the IRS, employees can be fired for failure to pay federal income taxes. But an IRS spokesperson tells WTOP it's no easier to collect from federal employees than it is to collect from the general public.

In the past, IRS officials have been quick to compare the federal workers' rate of compliance with the general public's. But this year, the IRS is not able to track the compliance rate for the general public. The percentage of federal employees who still owe back taxes for the 2005 year is 3.3 percent of the workforce including retirees.

The federal agency with the highest number of delinquent taxpayers is the United States Postal Service, where 56,652 employees owe more than $320 million. So far, about 22,000 of those employees have agreed to a payment plan.

A spokesperson for the Postal Service says the agency hopes all of its employees follow the law, but will leave enforcement to the IRS.

The agency with the best compliance rate is the Department of Treasury, which includes the IRS. Fewer than 2 percent of Treasury employees failed to pay their taxes. About 3,000 Treasury employees owed $13,489,683 -- 1,437 of those feds also have made payment plans.

The IRS tracks the compliance rate of federal employees each year in an effort to increase compliance. Agency directors are made aware of their department's compliance rate and then memos are sent to staff encouraging them to file their taxes.