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Tax Deadbeats on the Government Payroll

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By Stephen Barr
Tuesday, May 13, 2008

Federal employees are held to a high standard when it comes to ethics and the public trust. That's also the case when it comes to taxes.

Recently released data from the Internal Revenue Service show that federal employees owed $1.23 billion in overdue taxes in October 2007. According to the IRS snapshot, 3.79 percent of federal employees could be labeled tax deadbeats.

A billion-dollar tax debt sounds pretty bad. But the percentage of federal employees who have not paid their taxes on time actually has dropped slightly. For example, in 2005, the delinquency rate was 3.93 percent, and in 2006, 3.81 percent.

The compliance rate for the government is generally better than the rate for all Americans, the IRS said. The agency, though, does not release data that can be compared against information on federal employees, in part because the IRS knows a lot more about the income of people who work or have worked for Uncle Sam and can more easily match payroll, pension and other documents.

The IRS has been checking on federal employees since 1993 as part of a project called the Federal Employee/Retiree Delinquency Initiative, or FERDI. Government employees and retirees are considered delinquent if they have an unresolved federal income liability or have not filed a tax return.

The 2007 data show that 171,549 federal employees owed the $1.23 billion in overdue taxes. Of those, 69,383 had entered into installment agreements to pay off $388.6 million of the back taxes.

Almost every corner of the government has its share of tax laggards, including Congress and the White House, the data show.

In the House of Representatives, with more than 10,700 employees, the delinquency rate was 4.03 percent. The Senate, with nearly 6,700 employees, had a delinquency rate of 3.16 percent. At the Executive Office of the President, with 1,700 employees, it was 2.21 percent.

Some of the more notable delinquency rates were in relatively small agencies, where percentages are higher even though only several dozens of employees owe taxes. The delinquency rate was 7.23 percent at the Government Printing Office, 6.67 percent at the Federal Labor Relations Authority, 5.46 percent at the Smithsonian Institution, and 5 percent at the Merit Systems Protection Board.

Some large departments also had a higher proportion of tax laggards than the government-wide delinquency rate. The rate was 4.68 percent for civilian employees of the Army, 4.44 percent at the Department of Housing and Urban Development, and 4.16 percent at the Department of Health and Human Services.

The government's retirees also fall behind on their tax obligations, according to the IRS. More than 132,000 military retirees owed $1.47 billion in overdue taxes, for a delinquency rate of 4.05 percent. More than 66,000 federal civilian retirees owed $558.5 million, for a delinquency rate of 2.42 percent.

The grand total owed by federal employees, military personnel and retirees came to $3.58 billion. Those overdue taxes were owed by 449,531 people out of 9 million government employees and retirees, the IRS calculated.


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© 2008 The Washington Post Company

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