A recent report revealed that 149,000 federal employees collectively owe $1.5 billion in unpaid federal taxes, sparking outrage among Republican lawmakers. The audit, conducted by the Treasury Inspector General for Tax Administration, also highlighted that more than 5,800 IRS employees and contractors are responsible for nearly $50 million of this debt.
Sen. Joni Ernst (R-IA) criticized the IRS for its hypocrisy, noting the agency’s focus on auditing middle- and lower-income Americans while neglecting to address its own employees’ tax delinquencies. Ernst described these individuals as “repeat tax cheats” and urged the IRS to prioritize enforcement within its ranks. She questioned how taxpayers could trust an agency that fails to hold its own employees accountable.
In her letter, Ernst wrote, “There is absolutely nothing fair about forcing hardworking Americans to pay the salaries of tax-evading tax collectors while the IRS targets lower-income5 and middle-class Americans with nearly two-thirds of the new audits.
“Surely the irony and hypocrisy can’t be missed here: taxpayers are being forced to pay billions more to the IRS to audit America while the agency won’t even collect the tens of millions of dollars in unpaid taxes owed by its employees. Taxpayers will never trust the IRS when the agency’s own auditors can’t even pass a tax audit.”
Sen. Chuck Grassley (R-IA) expressed similar frustrations, labeling the IRS’s inaction as “unacceptable.” Grassley emphasized the heightened responsibility of federal employees to comply with tax laws, given that their salaries are funded by taxpayers.
Grassley wrote the following in his letter to the IRS Commissioner, Danny Werfel: “Federal employees have a heightened responsibility to be compliant in paying their tax obligations. The IRS should prioritize cases where federal employees are in brazen noncompliance with tax laws by failing to file their tax returns and, in some cases, for several years.
“The IRS’s apparent enforcement failures against federal employees is unacceptable. Taxpayers deserve to be assured that federal employees, whose salaries and benefits are funded through taxpayer dollars, are held to account by the IRS for failing to pay their taxes just like the rest of the American people are held to account.”
In response to the ongoing problem, Sen. Mike Braun (R-IN) reintroduced the Federal Employees and Retirees with Delinquent Tax Debt Initiative (FERDI) Act in March 2023. The proposed legislation would disqualify individuals with significant unpaid tax debts from federal employment and mandate regular IRS reporting on the tax compliance of its employees. Despite failing to advance in a Democrat-controlled Senate, the bill may gain traction with Republicans holding majorities in both chambers and the presidency.
Republicans argue that the revelations highlight a double standard in the IRS’s enforcement policies. Ernst pointed out the irony of funding the agency to increase audits while it neglects to address substantial unpaid taxes from its own workforce. Braun emphasized that taxpayer trust in the IRS cannot be restored until the agency enforces the same tax laws on its employees as it does on the general public.
