Federal workers owe $3.5 billion in back taxes

Saturday - 3/9/2013, 12:00pm EST

STEPHEN OHLEMACHER
Associated Press

WASHINGTON (AP) -- The number of federal workers and retirees who owed delinquent income taxes jumped by nearly 12 percent in 2011, the Internal Revenue Service said Friday.

Nearly 312,000 federal workers and retirees owed more than $3.5 billion in back taxes as of Sept. 30, 2011, the agency said. The year before, about 279,000 workers and retirees owed $3.4 billion.

Overall, the 9.8 million workers included in the data had a delinquency rate of 3.2 percent. That's better than the general public. The IRS says the delinquency rate for the general public was 8.2 percent.

The Department of Housing and Urban Development had the highest delinquency rate, at 4.4 percent. The Treasury Department, which includes the IRS, had the lowest, at 1.1 percent.

Among independent agencies with more than 1,000 workers, the Government Printing Office had the highest delinquency rate, at 7.6 percent. The National Credit Union Administration had the lowest, at 1 percent.

House employees had a higher delinquency rate than workers for the Senate, but not by much. House workers had a delinquency rate of 3.7 percent, while Senate workers had a delinquency rate of 3.3 percent. Federal court employees had a delinquency rate of 2.7 percent.

The IRS says most residents who owe back income taxes file returns but cannot pay the full amount at tax time. Others have their tax bills increased through audits and cannot pay the higher bill.

The statistics on federal employees do not include those who are on payment plans. The IRS doesn't publicize the data but makes it available upon request.

The new data comes as many federal workers are facing unpaid furloughs because of automatic spending cuts known as the sequester. Many federal workers have already received furlough notices; others will receive them in the coming months.

New bill targets delinquent contractors

Meanwhile, Rep. Jason Chaffetz (R-Utah) is going after deadbeat federal contractors once again.

He and Rep. Jackie Speier (D-Calif.) introduced the Contracting and Tax Accountability Act of 2013 (Hs.R. 882) on Feb. 28. The eight-page bill would not let agencies award contracts or grants to a contractor or grantee unless they certify in writing that they have no seriously delinquent tax debts.

It also would let the Treasury Department disclose to the head of the awarding agency information limited to describing whether the person has a seriously delinquent tax debt.

Additionally, the bill calls for the contractor or grant organization to be considered for debarment if they have a seriously delinquent tax bill.

Chaffetz and Speier define a contractor or grantee as a person, partnership or corporation, though not someone seeking assistance through a grant program.

The congressmen also define "serious delinquent" as any debt where a notice of lien has been filed in public records.

"Those who consciously ignore the channels and processes in place to fulfill their tax obligations must be held accountable," said Chaffetz in a release. "Since federal contractors draw compensation and funding from taxpayer dollars, we must ensure that they are complying with the existing laws."

The Coalition for Government Procurement said the bill would codify earlier Federal Acquisition Regulations rule requiring contractors to certify that they do not have a delinquent tax debt to the federal government. The FAR rule comes after President Barack Obama signed a directive in January 2010 ordering the IRS and other agencies to crack down on contractors who don't pay their taxes.

The Government Accountability Office found in 2008 "1.6 million businesses owed over $58 billion in unpaid payroll taxes, including interest and penalties. Of that amount, 70 percent of all unpaid payroll taxes are owed by businesses with more than a year (four tax quarters) of unpaid federal payroll taxes, and over a quarter of unpaid payroll taxes were owed by businesses that accumulated tax debt for more than three years (12 tax quarters)."

Additionally GAO found in 2011 Recovery Act recipients owe more than $757 million in back taxes.

Chaffetz also spearheaded an effort in previous years to crack down on federal employees who owe taxes, with the House passing a bill last July making applicants who owe "seriously delinquent" back taxes ineligible for federal jobs.

(Federal News Radio's Jason Miller contributed to this report)

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Tags: IRS, HUD, GPO