IRS wants agencies to track tax cheaters

Federal employees and retirees owe the IRS more than $2 billion and IRS Commissioner Charles Rossotti wants agency heads to encourage workers to pay up.

Rossotti sent letters to about 80 department and agency heads last month detailing each organizations' percentage of employees who are delinquent in paying their taxes.

The move is part of a compliance initiative the IRS calls "FERDI," the Federal Employee/Retiree Delinquency Initiative. It was established by the agency in 1993 to address federal employee tax compliance problems, such as owing a balance or failing to file a tax return.

On average, 5.2 percent of each agency or department's staff is considered tax delinquent. Among Cabinet departments, the Education Department has the highest percentage of tax delinquent employees at 9.7 percent, while Defense Department employees owe the most of any department, $221 million. Among independent agencies, the Pension Benefit Guaranty Corporation topped the charts with nearly 12 percent of its staff listed as delinquent. Employees at the Social Security Administration owe $14 million, the most of any independent agency.

"The rate of compliance among federal employees and retirees continues to be better than the general public, but our most recent data still reflects a high number of potentially noncompliant federal employees," Rossotti's letter said. The general public has an 8.5 percent delinquency rate.

Noting that the public's confidence in the government's "ability to ... hold our employees to a high ethical standard is paramount," Rossotti suggested that department and agency heads communicate the tax delinquency problem by circulating a memo or newsletter or by sending a notice with pay statements.

"We hope our effort will result in improved public confidence in government, adherence to ethical standards and tax compliance," the letter said.

Tax Delinquency by Agency