On Thursday, Sen. Tom Coburn, R-Okla., reintroduced legislation that would terminate federal employees who have "willfully neglected" to pay their incomes taxes. The bill, co-sponsored by Sen. Claire McCaskill, D-Mo., also would direct the Internal Revenue Service to collect the unpaid funds, potentially saving taxpayers at least $3 billion, Coburn said.
"Federal employees have a clear obligation to pay their federal income taxes," Coburn said on Thursday. "The very nature of federal employment and the concept inherent to 'public service' demands those being paid by taxpayers to also pay their fair share of taxes. Federal workers should not be exempt from the laws they enforce. In fact, they should lead by example. Failure to do so is an affront to taxpayers and to the rule of law."
Coburn introduced a similar bill last September, but it did not garner Democratic support in the 111th Congress. A companion measure in the House, sponsored by Rep. Jason Chaffetz, R-Utah, also died, in part because critics said it defined delinquency as the issuance of a lien by the IRS, which could be an early stage in resolving a tax dispute.
The new bill, while using the same definition of tax delinquency, attempts to absolve federal workers who are working to settle their debts.
Specifically, the legislation excludes government employees from termination if they have reached an agreement, or are paying their back taxes to the IRS under an installment plan. Also exempt are individuals who have not exhausted their due process rights to dispute the claims, or who successfully argue that the debt is attributable to a spouse.
"It is not the intention of this legislation to single out the majority of federal employees who work hard and pay their taxes," Coburn said. "Instead, the bill would carefully reach only those who have willfully neglected to pay their incomes taxes and would direct the IRS to only collect money already owed under the federal Tax Code."
But the National Treasury Employees Union said the bill is unfair and politically motivated.
"NTEU believes that everyone, especially federal employees, should pay their taxes, but many times delinquency is due to financial hardships like loss of a family member's job or unexpected expenses due to things like illness or death of a family member," said union president Colleen Kelley. "Rather than working toward the goal of taxpayer compliance, this legislation simply goes for short-term political points by targeting federal employees, and I find that disappointing."
"All federal employees, not just IRS employees, should be held accountable for failure to pay their federal taxes," McCaskill said in a statement. "This legislation is just common sense."
In 2009, the IRS counted nearly 100,000 civilian federal employees who were delinquent on their federal income taxes, owing more than $1 billion. When considering retirees and military, more than 282,000 federal employees combined owed $3.3 billion in taxes, Coburn said.
Several federal labor unions have said those figures are overstated. Democratic lawmakers also have raised concerns about whether previous versions of the bill would overburden the Office of Personnel Management, which would be responsible for administering the provision.
A fact sheet provided by Coburn's office, however, said the bill is necessary to begin chipping away at the federal deficit. He pointed to the delinquency rate of several large federal agencies. The Veterans Affairs Department, Coburn said, has a delinquency rate of 3.91 percent, with more 10,000 employees altogether owing in excess of $130 million. The Health and Human Services Department, he added, has a delinquency rate of 3.86 percent, with nearly 3,000 of its workers owing some $34 million.
The bill also would apply to Capitol Hill staffers, who cumulatively owe $9.3 million in back taxes, according to recent IRS data.
The IRS already can levy up to 15 percent of federal employees' paychecks if they are delinquent on their taxes under the Federal Payment Levy Program. Some critics have suggested that firing the employees would expose the government to larger unpaid tax liabilities, because the IRS would have a harder time recovering back taxes from an unemployed individual.