Tax Deadbeats on the Government Payroll

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.

While those amounts are large, it's important to note that the IRS brought in $2.69 trillion in taxes in fiscal 2007. The most recent estimate of the "tax gap," the difference between what taxpayers should have paid and what they actually paid on a timely basis, is $345 billion.

Not surprisingly, IRS employees have one of the best compliance rates. For 2007, the IRS delinquency rate was 0.89 percent, down from 1 percent in 2006 and 2007. IRS employees can be fired for failing to comply with the tax code under the 1998 law that restructured the agency.

Honoring Public Servants

The Government Employees Insurance Co., known as Geico, honors federal employees each year for their work in protecting public safety and health. This year's award winners are:

Jennifer Allies of the Indian Health Service's Northern Cheyenne Service Unit in Lame Deer, Mont., for her commitment to providing physical therapy services for rural patients.

Joseph R. Baker, deputy fire chief at Fort Campbell, Ky., for his fire prevention and safety work on behalf of military personnel.

Joseph W. Hafner, a safety and occupational health specialist at Fort Bragg, N.C., for providing military personnel with auto crash and safety information.

Gloria Jean Prince, an education specialist with the Army Substance Abuse Program in South Korea, for her efforts to reach out to soldiers and help them address alcohol and drug problems.

Ileen Wong, who retired as nuclear director for crane and rigging operations at Pearl Harbor Naval Shipyard, for her volunteer work serving children with special needs.

Stephen Barr's e-mail address is barrs@washpost.com.