Government employee and management groups on Wednesday said legislation that would ban tax delinquents from federal employment could punish federal workers more severely than civilians, and that provisions already exist to punish those civil servants who flout tax laws.
"It is our belief that federal employees should be held to the same standards as the rest of the American population, receiving no special treatment while also avoiding the bull's-eye that so often falls on their backs," said Richard Oppedisano, national secretary for the Federal Managers Association. Rep. Jason Chaffetz, R-Utah, ranking member of the House Oversight and Government Reform federal workforce subcommittee, sponsored the bill.
Oppedisano argued the extent to which federal employees were delinquent in paying their taxes had been overstated. While in 2008, federal employees, retirees, and active-duty and retired members of the armed services owed $3 billion in back taxes, former members of the military owed the largest portion of that amount -- $1.3 billion. That year, 97,000 federal employees owed $962 million in unpaid taxes, Oppedisano said; that figure was down from 171,000 federal workers in 2007. He noted that almost 700 congressional staffers currently owe back taxes, but they would not be subject to Chaffetz's bill.
Oppedisano and Colleen Kelley, president of the National Treasury Employees Union, said the legislation represented a culmination of anti-federal employee sentiment. They argued the bill, which would subject employees to termination before they had a chance to appeal liens filed against them by the Internal Revenue Service, would hold federal employees to a higher standard than ordinary civilians.
Christopher Rizek, a tax attorney at Caplin & Drysdale who was a former associate tax legislative counsel at the Treasury Department, said it was appropriate to treat federal employees differently on tax matters. "Federal employees, being particularly visible beneficiaries of public support, are particularly visible when they fail to comply" with federal tax law, he said.
But Rizek agreed with employee groups that it was premature for the bill to require agencies to fire federal employees when the IRS files federal tax liens against them. He called that provision "far too uncertain" a standard on which to base a worker's employment or potential for employment. Currently, after those liens are filed, employees can appeal and ask for a collection due process hearing to review whether the lien is appropriate. Kelley noted the IRS recently took steps to accommodate delinquent taxpayers inside and outside government who were in severe financial hardship, suggesting the liens are only a first step in the process of recovering unpaid taxes.
Chaffetz's legislation does create an exception for federal employees who are repaying their debt under a payment plan, or who have requested or are awaiting the results of a collection due process hearing. The lawmaker said he had no intention of trying to get federal employees fired, but introduced the bill to make the point that government workers should be held to standards similar to those the Obama administration wants to apply to contractors.
"If you are going to have the privilege of working with the United States of America, you have a duty to pay your taxes," he said. "If somebody is trying to do the right thing, the intention is to not simply lop off their heads and ruin their lives."
Federal employee groups also said Chaffetz's legislation did not include a sufficiently rigorous definition of the "seriously delinquent tax debt" phrase that could trigger termination. A similar bill, sponsored by Rep. Brad Ellsworth, D-Ind., would ban federal contractors from receiving contracts or grants when their tax debt rose above $100,000.
Rizek also noted the consequences of termination or a ban from working in government were so severe they could deter agencies from pursuing punishment of delinquent employees at all. He said it might be more appropriate to include a number of potential consequences, including ineligibility for promotions or salary increases, in addition to termination.
Kelley said there were a number of mechanisms in place to punish federal employees who willfully flout tax laws. Agencies currently are allowed, under the U.S. Code rules administered by the Office of Government Ethics, to discipline employees who do not meet their "just financial obligations, especially those such as federal, state or local taxes that are imposed by law."
Since 1993, Kelley said the IRS has run the Federal Employee/Retiree Delinquency Initiative to encourage agencies to promote timely and accurate tax filings among their staffs. That program does not identify individual tax delinquent employees to agencies, but it gives agencies statistics on how many of their employees are delinquent. In 2008, the federal employee and retiree rate of noncompliance with government tax laws was 2.86 percent, a decline from 3.47 percent in 2002.
And the IRS also can levy up to 15 percent of federal employees' paychecks if they are delinquent on their taxes under the Federal Payment Levy Program.
Within the IRS, a 1998 rule allows the agency to fire employees automatically if they do not file their tax returns on time. The Bush administration called on the IRS to include provisions to discipline employees rather than fire them, Kelley said, so the agency would not lose workers to minor tax errors or infractions.
"There is no existing problem that H.R. 4735 would address," said Rep. Gerry Connolly, D-Va. "Taxpayers are already protected from [federal employees'] failure to pay taxes. In fact [the bill] could expose the federal government to larger unpaid tax liabilities, since it would be harder for the IRS to recover back taxes from unemployed individuals than federal employees."