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August 8, 2012


Federal Employees With Unpaid Taxes Face Possible Job Loss Under House Bill

When the IRS says you have unpaid income taxes, several different scenarios can ensue. It may be that the agency is in error, and that aggressive tax litigation can resolve the dispute in your favor.

In other cases, the result can be tax debt and possibly civil penalties. Some cases can also result in criminal charges of tax evasion.

But most people do not normally think that tax debt will threaten their jobs. That is precisely what is being proposed for federal employees, however, in a bill currently in Congress.

The bill is H.R. 828, the Federal Employee Tax Accountability Act. The House of Representatives passed the bill last week by a vote of 263 to 114.

“Employees who consciously ignore the channels and processes in place to fulfill their tax obligations must be held accountable,” said the House sponsor of the bill, Rep. Jason Chaffetz of Utah.

If the Senate also passes the legislation, federal employees with delinquent taxes would lose their jobs. The bill would also prevent the hiring going forward of new federal employees with significant tax debt.

The IRS estimates that nearly 100,000 civilian federal employees owed a total of over $1 billion in federal income taxes in 2010.

As the law stands now, only employees of the IRS can lose their jobs for failing to pay federal income taxes. The bill passed by the House last week would extend that consequence to all federal employees.

Even if the bill becomes law, there would still be a process for federal employees to keep their jobs by entering into an installment agreement to pay the tax debt to the IRS over time. That process involves a determination that the employee / taxpayer is “seriously delinquent” on federal taxes.

Source: “House Approves Bill to Fire Federal Employees with Delinquent Taxes,” Accounting Today, Michael Cohn, 8-7-12

•· Our firm represents clients in many different types of tax disputes. Follow the link to learn more about our individual income tax practice.

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