Provision to fire tax-delinquent federal employees pulled

A legislative compromise that would have allowed agencies to fire tax-delinquent federal employees fell apart on Thursday.

The compromise softened an amendment to the 2009 Contracting and Tax Accountability Act that Rep. Jason Chaffetz, R-Utah, introduced earlier this week. The act already would prohibit companies that don't pay their taxes from winning federal contracts; Chaffetz's amendment extended that principle to "seriously delinquent" federal employees and congressional staffers.

Modified language that would have provided federal employees with due process protection and a hardship exemption won support from House Oversight and Government Reform Committee Chairman Edolphus Towns, D-N.Y. But, Rep. Stephen Lynch, D-Mass., chairman of the Oversight and Government Reform subcommittee on the federal workforce, and other Democrats, said the compromise amendment still was unduly harsh because it defined delinquency as the issuance of a lien by the Internal Revenue Service, which could be an early stage in resolving a tax dispute.

Chaffetz, however, argued that the amendment offered protection to employees who were working to settle the tax disputes.

Democrats also raised concerns about whether the amendment would overburden the Office of Personnel Management, which would be responsible for administering the provision.

As debate over the provision disintegrated and Democrats called for an opportunity to hold a hearing, Towns pulled both the amendment and the bill from the floor and postponed a vote.

A committee source said there was too much "confusion" with the amendment and lingering issues needed to be resolved.

"We wanted to take a break to make sure there were no unintended consequences with the bill," the source said.

But, Republicans accused the Democrats of protecting federal employees.

"I am thoroughly disappointed that Democrats rejected the chairman's compromise and stubbornly refused to work with him on an effort to hold federal employees to the same standard as the private sector," said Rep Darrell Issa, R-Calif., ranking member of the Oversight and Government Reform Committee. "There needs to be consequences for both contractors and federal employees who fail to pay their taxes."

"Chairman Towns' compromise proposal on my amendment was a sensible approach, and it's puzzling that members on the other side didn't agree," Chaffetz said. "The IRS already has a similar policy in place and they have demonstrated that it works."

Chaffetz said the tax delinquency rate for the Treasury Department -- which includes the IRS - -is less than 1 percent, compared to 3.4 percent for the rest of the federal government. He said the government fails to collect roughly $1 billion in taxes annually from about 100,000 federal employees.

The committee source said it was not clear if the issues with the amendment would require a hearing or if they could be worked out in a private meeting with the IRS.