IRS Chides U.S. Agencies Over Tax Delinquents

Federal employees and retirees owe more than $2.5 billion in back taxes but actually are more conscientious taxpayers than Americans overall, the Internal Revenue Service says.

As of October, just more than 2.8% of federal employees and retirees, or about 244,000 people, had balances due on past income taxes but had not agreed to an installment plan with the IRS.

For the population as a whole, it was 5.2%. Still, IRS Commissioner Charles Rossotti says tax delinquency at any level by federal workers is cause for concern.

“If the public perceives that federal employees do not maintain the highest level of tax compliance, public confidence in government will suffer,” Rossotti said in a letter to federal agency heads, detailing each department’s noncompliance rate.

The data, compiled by the IRS annually since 1993 and to be released this week, include Congress, the White House, Cabinet departments, courts and independent agencies.

In all, 381,500 federal employees or retirees out of almost 8.7 million were behind on their taxes. About 11.5 million of an estimated 177.5 million taxpayers nationwide owed $28.2 billion.

Those totals included about 2.3 million taxpayers who were paying off $8.6 billion in taxes through monthly installment agreements. About 137,000 federal employees were paying off $608.6 million that way.

It is the noncompliance rate that draws the most scrutiny.

On Capitol Hill, the House had a noncompliance rate of more than 4%, compared with almost 3.5% for the Senate. The rates include members of Congress and their staffs. The Executive Office of the President had a noncompliance rate of 3.4%.

The Education Department and Department of Housing and Urban Development each were over 4%, the highest among Cabinet agencies.

The Defense Department had by far the biggest outstanding tax bill at $205.6 million. More than 110,000 retired military personnel owed more than $1 billion.

The Treasury Department, which includes the IRS, had the lowest rate among Cabinet agencies: 1.5%. Even lower was the FBI, at 1.4%, with 812 individuals owing about $3.5 million.

The rate for the CIA was not available because its total number of employees is classified, but the intelligence agency did have 304 individuals who owed more than $2 million. The National Security Agency had 450 employees owing $2.3 million.