For all the White House talk about how you must pay your “fair share” in taxes to help pay down the $15 trillion deficit, at a time when Americans are struggling to find work, have you seen how many federal workers aren’t paying federal taxes at all?
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And it’s not a loophole, either.
According to Internal Revenue Service data, 100,000 federal workers and contractors owed $1 billion total in unpaid federal taxes in 2009, the latest figures available. They simply didn’t pay what they owed. And that dollar amount is up 67% since 2004, when federal workers underpaid by nearly $600 million. In fact, every year since 2004, the IRS has had to deal with about 100,000 federal workers and contractors who underpay their taxes each year.
Now these workers, many of them union, could be fired under a bill that gets a vote in the House today. That includes government contractors, too.
Rep. Jason Chaffetz (R-Utah) has today introduced the new bill, which would fire federal employees and outlaw the hiring of federal employees or contractors with seriously delinquent tax debts. The congressman has already attempted to get similar bills passed -- then Senator Barack Obama sponsored an identical companion bill, S. 2519, in 2007.
“Federal employees, contractors, and grantees have an obvious obligation to pay their taxes,” said Chaffetz in a press release. “Because they draw their compensation and funds from the American taxpayers, they owe it to the taxpayers themselves to be compliant. Those that do not, should be fired or lose funding.”
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Chaffetz notes that, in a way, this tax evasion is a form of double-dipping, because taxpayers provide the funds that generate the paychecks, and then the workers don’t return any of those funds as taxpayers themselves.
The bill defines "seriously delinquent" as "an outstanding tax debt for which the IRS has issued a notice of lien. If federal workers are paying under an agreement with the IRS or the tax debt is under review, they wouldn't be fired or the prospective employee could be hired. The government would be required to give workers 180 days to show their debt is being paid off.
Currently, only IRS workers can be fired for failing to pay federal income taxes. But the government workers union is opposed. Colleen Kelley, the president of the National Treasury Employees Union, has said in a statement: “We find this measure redundant, since there are sufficient remedies already in place, including wage garnishment, to deal with those who fall behind in their tax obligations, but are capable of repayment.”
However, tax evasion has been a rampant problem in the federal government for years -- even at the tax collecting agency itself.
In April 2007, the Government Accountability Office reported that it estimated approximately 60,000 federal contractors owed approximately $7 billion in delinquent federal taxes.
And eleven IRS contractors owed $3.8 million in total back taxes, but they still got more than $356 million in IRS funds in 2009 and a whopping $3.7 billion from other federal agencies, according to a government report, Existing Practices Allowed IRS Contractors to Receive Payments While Owing Delinquent Taxes.
The new bill will attempt to mandate tax compliance as a prerequisite for receiving a federal contract. In 2008, The Federal Acquisition Regulation was altered, forcing contractors to certify to the federal government that they do not have a delinquent federal tax debt.
|Year||Number of Delinquent Federal Employees||Dollar Amount of Delinquencies|
Source: Internal Revenue Service FERDI. Excludes federal employees who owe taxes but have entered into repayment agreements.