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Tax Non-Compliance Among Federal Workers Increases

March 12, 2013

Federal workers, especially those working in the IRS, typically are not people associated with the non-payment of taxes, but according to the IRS, the amount of federal employees and retirees who hadn’t fulfilled their tax duty increased nearly 12 percent in 2011.

As many as 312,000 federal workers and retirees owe more than $3.5 billion in tax debt as of Sep 30, 2011. In 2010, 279,000 federal employees and retirees owed $3.4 billion in unpaid taxes. The figures do not include federal workers who are on IRS payment plans.

According to the IRS, the delinquency rate of the general public was 8.2 percent, whereas that of federal workers and retirees was 3.2 percent. The delinquency rate of IRS employees stands at 1.1 percent, which is the lowest among federal workers.

Automatic spending cuts are one of the reasons federal employees face unpaid furloughs, which hinders their ability to pay their back taxes. Other reasons for unpaid taxes among taxpayers are tax avoidance, tax evasion, bad legal advice, failure to file, and inaccuracies within their tax filing.

Back taxes, whether they are from federal workers or average taxpayers, must be paid on time to avoid IRS collection actions, such as a tax levy. The easiest method to pay a tax debt is to pay the full amount of back taxes. However, many do not have the means to, so the IRS has payment plans where taxpayers can pay the debt in installments, get the debt amount reduced, or postpone the payment of their tax debt altogether.

Postponing the payment of back taxes or ignoring IRS notices increases the threat of collection actions and also allows interest on the amount of tax debt to keep accruing. Therefore, tax lawyers advise an early resolution to any back tax debt.

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