Waste of the Day: Fed. Employees Late On Taxes

Topline: More than 571,000 current and retired federal employees owed $6.3 billion of unpaid federal taxes as of 2024, according to a new report from the Treasury’s inspector general.

Federal employees and retirees owe billions in collective unpaid taxes

Key facts: There are 215,000 active employees with $2.1 billion of unpaid taxes. The rest of the tax dodgers are retired workers who receive a federal pension.

The issue has steadily worsened since 2021, when 401,000 employees owed $4.8 billion. The inspector general said some enforcement measures were paused during the Covid-19 pandemic.

The U.S. Postal Service has the worst delinquency rate, as 10.1% of employees are late on their taxes. The Small Business Administration is second-worst at 8.7%.

Roughly 50,000 federal employees failed to file a tax return for at least two years, including more than 10,000 employees who skipped at least four years. A handful of workers were late on their taxes by nine years or more.

In June 2025, the IRS sent letters to 427,000 federal employees reminding them to pay their tax balances. Thirty days later, only 4,700 workers had paid their balances in full.

Privacy laws make it difficult for the government to hold its tax-delinquent employees accountable. The IRS legally cannot tell other agencies which of its employees have unpaid taxes. The IRS does mail collection notices directly to the employees, but they often go ignored.

The Federal Employee/Retiree Delinquency Initiative is the IRS program responsible for collecting unpaid taxes from federal employees. Half of the program’s staff were cut after President Donald Trump took office in January 2025, and it now has only 121 enforcement officers.

Setting a poor example

Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com.

Critical quote: In a June 26 letter to the IRS, House Oversight Committee Chairman James Comer wrote:

Failure to file and pay taxes sets a poor example for everyone else, and more should be done to stop noncompliance before it occurs or reoccurs. Non-filers flagrantly disregard the law, not only resulting in lost tax revenue, but also harming the reputation of the tax system and the federal government. Derelict employees send a signal to the public that filing and paying taxes is optional.

Comer is directing a congressional investigation into the unpaid taxes.

Summary: Nobody likes paying taxes, but those receiving a paycheck directly from taxpayers have a particular responsibility to pay their dues and demonstrate compliance.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RealClearInvestigations and made available via RealClearWire.