IRS Contractors Owe $5.4 Million in Back Taxes
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The Fiscal Times
October 23, 2013

The Internal Revenue Service needs to do a better job of auditing its own employees.

Nearly 700 IRS contract workers owe more than $5.4 million in back taxes, according to a new report from an agency watchdog. More than half of those employees aren’t even on a repayment plan — violating an agency policy that requires them to be in full compliance with federal tax laws and making them technically ineligible to work for the IRS.

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The report released Wednesday by the Treasury Inspector General for Tax Administration (TIGTA) says that of the 691 IRS contractors that owed back taxes as of June 2012, some 352 were not enrolled in a payment plan, for a delinquency rate of 2.6 percent.

Unlike other government agencies, the IRS requires its employees and contractors to file returns on time and pay all of the taxes they owe or enroll in a payment plan. Otherwise, they face suspension or termination.

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Overall, the inspector general found that the IRS does a good job of monitoring the tax compliance of its 90,000 employees, but the agency needs to hold its contract workers to the same standard. The IRS continuously monitors its direct employees’ tax compliance, but only reviews contractors’ tax compliance every five years.

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"Because many contractor employees have access to sensitive IRS systems and facilities, the IRS should address tax noncompliance for these employees in a similar manner as it would for its own employees," said J. Russell George, the inspector general whose office prepared the report.

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The IRS said it would review the cases of delinquent contract workers and take "additional action as necessary."

Aside from its contractors, the IRS deserves some credit—it (appropriately enough) belongs to the department with the lowest delinquency rate in the federal government: the Treasury Department, with a rate of 1.1 percent. That’s compared to the overall delinquency rate of 3.2 percent for federal workers and retirees.

Washington Correspondent Brianna Ehley, based in D.C., covers Congress, government agencies and spending issues, health care, and tax and economic policy for The Fiscal Times.