Federal Managers Association
- FMA PRESENTS TESTIMONY ON EMPLOYMENT ELIGIBILITY OF CIVIL SERVANTS WITH TAX DEBT - MARCH 17, 2010
Testimony for the Record
Before the United States House of Representatives
Committee on Oversight and Government Reform
Subcommittee on Federal Workforce, Postal Service and the District of Columbia
March 17, 2010
Ineligibility of Persons With Seriously Delinquent Tax Debt for Federal Employment
Maintaining Equity in the Taxation Process: Protecting the Rights of Today’s Civil Service
Statement of Richard Oppedisano
Federal Managers Association
Chairman Lynch, Ranking Member Chaffetz and Members of the House Oversight and Government Reform Subcommittee on the Federal Workforce, Postal Service, and the District of Columbia:
My name is Richard Oppedisano and I am here today representing the over 200,000 managers, supervisors and executives in the federal government on behalf of the Federal Managers Association (FMA). Please allow me to take a moment and thank you for the opportunity to present our views before the Subcommittee. As federal managers, we are committed to carrying out the missions of our agencies in the most efficient and cost effective manner while providing necessary services to millions of Americans.
Currently, I serve as the National Secretary of the Federal Managers Association, a position I have held since 2004, and was recently reelected to serve another two year term. I retired from the federal government in 2004 after serving as a civilian with the Department of the Army for over thirty years at the Watervliet Arsenal in Watervliet, New York. Prior to my joining the civil service, I served in the United States Navy for six years. During my time at Watervliet, I held many positions, most in the area of personnel. I have over 25 years experience in the human resources field, and prior to retiring, I served as the Operations Officer/Chief of Staff in the Office of the Commander. I have held a leadership role within FMA for over 25 years and have been a member for over thirty years.
Established in 1913, the Federal Managers Association is the largest and oldest association of managers and supervisors in the federal government. FMA was originally organized to represent the interests of civil service managers and supervisors in the Department of Defense and has since branched out to include some 35 different federal departments and agencies. We are a nonprofit, professional, membership-based organization dedicated to advocating excellence in public service and committed to ensuring an efficient and effective federal government. As stakeholders in the legislation we are discussing today, we appreciate the opportunity to appear before the Subcommittee.
The Role of Federal Employees
Moving forward in the second session of the 111th Congress, the President and lawmakers continue to grapple with the demands posed by difficult economic conditions and military engagements on multiple fronts. In the midst of this challenging climate, FMA remains committed to ensuring the success of the nearly two million civil servants who consistently go above and beyond the call of duty to achieve the government’s mission by providing needed services to millions of Americans each day. To this end, FMA fights to promote an environment in the federal government that attracts talented, civic-minded and hardworking federal employees to ensure the taxpaying public receives the highest level of service.
The Administration and Congress have set forth an aggressive agenda that requires members of the civil service to take on an ever-expanding role, both at home and abroad, while providing fewer resources to accomplish these tasks. Compounding the predicament is the looming wave of retirement which threatens to pull vast amounts of experience and know-how from the federal workforce while exacerbating the challenge of replacing management ranks and filling critical positions. As federal managers, we find ourselves on the front lines during these times, and we at FMA intend to play a critical role in shaping legislation that advances the mission of the civil service.
The federal government’s most important resource is its workforce. Federal employees serve alongside their military counterparts on the ground in Iraq and other conflicts abroad. They are on the cutting-edge of disease research, energy efficiency initiatives and the many social programs that deliver needed services to millions of Americans. They are doctors, engineers and law enforcement officers working to secure our nation’s borders. They lead homeland security efforts and ensure disabled Americans receive the benefits and care they require and deserve. They do all of this without requiring special recognition from those they serve because they believe in the value of their work.
Despite their dedication to advancing the nation’s interests, federal employees continue to serve as a punching bag for the press, and with the economic downturn, this mentality has crept its way onto Capitol Hill. As of late, federal employees have had to deal with media reports detailing their salaries and claims that they make too much money. To add insult to injury, these same media outlets are calling for a reduction in federal salaries in order for the government to save money, without bothering to take a hard look at the work federal employees carry out on behalf of this country, not to mention the economic impact such a proposal would have. Several Members of Congress have made similar statements in the media. In fact, if you read the headlines covering the legislation we are here to discuss today, they are often misleading, and in some cases, blatantly wrong. Headlines claiming, “Feds Owe Billions in Unpaid Taxes,” do nothing more than add fuel to the fed-bashing fire. It is not until one actually reads the articles that you discover active federal employees account for less than one third of what is owed, and that the gravest abusers are military retirees.
As public figures, it is your responsibility to separate fact from fiction, especially as it pertains to our nation’s workforce and in turn, our nation’s security. We at FMA remain committed to combating the negative and misrepresented image of the federal workforce in the media and on Capitol Hill.
Legislation introduced by Congressman Jason Chaffetz (R-Utah), H.R. 4735, would bar federal employees facing “seriously delinquent tax debt” from continuing to serve in the government. It would also prevent individuals with seriously delinquent tax debt from entering the federal workforce. Employees of the Judicial and Legislative Branches would also be subject to the same guidelines. The Office of Personnel Management (OPM) would be responsible for carrying out these rules within the Executive Branch.
Who Would be Affected by the Legislation?
As we previously mentioned, articles covering the situation have been very misleading. In 2008, federal employees, federal retirees, active duty military and retired military owed a cumulative $3 billion in unpaid taxes, according to the Internal Revenue Service (IRS). In terms of just dollars, military retirees owe the most, with over $1.3 billion in unpaid taxes. After accounting for active duty military employees and federal retirees, current active federal employees account for $962 million of the $3 billion in unpaid taxes. Just over 97,000 employees, less than five percent of the active federal workforce, were delinquent on their taxes in 2008. This is down from 171,000 employees in 2007.
That said, the legislation would affect, at most, 97,000 civil servants and would only recover less than a third of what is owed in back taxes. Of those individuals, the legislation would only affect those who are “seriously delinquent.” It is our estimate that very few of the 97,000 fall into the seriously delinquent category. However, we must carefully examine what seriously delinquent means. According to the legislation as written, it would affect any employee who has a lien filed against his/her property in order to recover unpaid taxes. As we understand it, this would not include employees who have agreed to a payment schedule. We are concerned, however, that the legislation could relate to an ongoing tax dispute that is not resolved as of the filing of the lien.
Taking this into account, an important question at hand is – how many employees would really be affected by this legislation?
Current IRS Rules for Tax Collection
FMA’s IRS Conference is the second largest conference within our Association, second in numbers only to our members in the Department of Defense. When discussing penalties for unpaid taxes, federal employees and the general public are held to the same standards. However, IRS employees are held to stricter standards, as they are subject to termination if they have outstanding tax debt.
With an understanding of the complexities involved in the process of filing taxes, the IRS currently affords individuals disputing their tax debts several avenues for reconsideration. After the initial examination and determination by an IRS agent, an individual may file for an appeal with the agency. At this point, an independent examiner, barred from consulting with the original IRS agent on the case, evaluates the individual’s claim, comparing information compiled by the IRS with that offered by the taxpayer. If the taxpayer and the reevaluation conducted by the independent examiner are still at odds, the IRS provides the taxpayer with a legal notice detailing the determination and affording the individual ninety days to appeal the decision in court or enroll in a repayment schedule or similar compromise. If the IRS decision holds up in court, a series of notices will be sent to the taxpayer with information relating to the tax obligation. Failure to respond through repayment of the determined debt then results in placement of a lien on the individual’s property or a garnishing of wages. The same process is conducted regardless of where one works, with the exception of IRS employees.
FMA’s Perspective on the Legislation
First and foremost, as taxpayers ourselves, FMA members in no way, shape or form support the actions of federal employees who neglect to pay their taxes in a thorough and timely manner. It is extremely distressing to hear stories and reports of government employees who continue to receive a federal salary while refusing to follow tax laws. While there are many extenuating circumstances that justify individuals’ calls for reconsideration of the money owed, those who consciously bypass the channels and processes in place to fulfill their tax obligations should be held accountable for their actions, or rather, inaction. When these individuals are civil servants, their conduct casts a dark shadow over their fellow coworkers, many who have devoted their lives to public service at the expense of other opportunities in the private sector.
When considering this legislation, it is critical that Members of Congress isolate this issue from other topics floating through the media challenging the role played by members of the federal workforce. We are here today to discuss federal employees who are deemed seriously delinquent on their tax obligations, convening to determine what should be done to combat this dilemma. We are not here today to discuss topics such as the public-private pay gap, federal employee turnover rates, or the myriad of other issues that may deserve consideration and debate at some other juncture. When public figures lump all of these issues together in a statement that is principally designed to address federal employees’ tax debts, the result is a firestorm of anti-civil service zeal that detracts from the current debate at hand.
FMA has several concerns with both the intent of H.R. 4735 and its practical application. It is our belief that federal employees should be held to the same standards as the rest of the American population, receiving no special treatment while also avoiding the bull’s-eye that so often falls on their backs. With that in mind, there are laws currently in place that deal with delinquent taxpayers, and we should first work to ensure that these laws are enforced judiciously across the board. IRS employees handle a multitude of tax cases that warrant application of actions modified for individual circumstances. Approving this bill could severely jeopardize the ability of IRS agents to direct federal employees facing extenuating circumstances down the path to tax settlement, instead resorting to dismissal of said employees. The complexity of individual cases can also lead to inaccurate collection judgments on the part of IRS. FMA is concerned that H.R. 4735 may simultaneously restrict federal employees’ ability to comprehensively dispute their tax obligations while also stifling the IRS from pursuing payment through all established channels.
Additionally, if a lien has been filed, yet the IRS is unsuccessful in its attempt to collect payment and the employee is subsequently terminated, one must question how the now-former employee is going to repay what is owed while not collecting a paycheck. Last we checked, the unemployed do not make for very good taxpayers. Ultimately, the government would still be unable to recoup repayment from this individual.
Here is just one example of the potential impact of this bill. One federal employee in California lost her federal security clearance because of a tax issue resulting from her ex-husband’s illegal business practices. Under state law, this civil servant, who herself had done nothing wrong, was deemed liable for the offenses committed by her ex-husband. Her security clearance was required for access to her facility, and as a result of losing her clearance, she lost her job. While we do not believe situations such as this occur often, we at FMA believe that under the legislation, similar circumstances could become commonplace.
Examples such as this reinforce our belief that this legislation seeks to create a system where there is always an easy answer even though a plethora of individual cases requiring unique exemptions exist. We do not operate in a tax system that exists in a vacuum, where everything presented before an IRS agent is black and white. IRS agents are successful in their profession because they are trained to evaluate each case based on its own set of circumstances. While there certainly are individuals who have been provided every opportunity to pay back their debt and still refuse to do so, this legislation may potentially impact a greater audience than intended. All taxpayers must be allowed to challenge IRS determinations in full; H.R. 4735 could enable agencies to fire employees before full reconsideration has taken place.
We must also recognize the impact terminating these employees would have on overall agency missions. As we are all aware, the current federal hiring process is hardly efficient. Should this bill be signed into law and, worst case scenario, 97,000 employees are subsequently fired, agency missions and public services could be in serious jeopardy. The impact of such a situation would be nothing short of disastrous.
We must also examine the legislation in terms of its potential effect on OPM and the IRS. From a logistical and personnel standpoint, H.R. 4735 would task OPM with carrying out the regulations within the Executive Branch. This would require both additional time and resources and should not be ignored during deliberation of the measure. The IRS would be tasked with distinguishing between federal employees and non-feds, a mechanism which currently does not exist. Additionally, the legislation does not specify who would carry out these tasks in the Judicial and Legislative Branches. During Committee consideration of this legislation, a compromise was offered which would exempt judiciary and legislative employees from the provisions. With nearly 700 Capitol Hill staffers who owe back taxes, we at FMA disagree with exempting them from the regulations, should this bill ultimately pass. It is our belief that whatever is decided here today should apply to all those whose salaries are paid for by the taxpayers, including teachers, firefighters, police officers, and yes, Members of Congress.
Moving Forward from Here
It is extremely difficult and perhaps impossible to judge an individual’s intent when it comes to the failure to file taxes, but this is a consideration that must be taken into account. Deliberate or fraudulent non-payment is vastly different than a technical mistake, but each of these examples may lead to a drawn-out appeals process resulting in identical determinations. Under H.R. 4735, the employee who made an innocent mistake could be deemed seriously delinquent and unfairly penalized.
We feel it is important to note that many federal agencies have regulations in place which state a failure to pay federal taxes is a violation of ethics rules. Under these regulations, an agency can discipline a delinquent taxpayer as it deems appropriate. This would allow managers more flexibility to determine satisfactory reprimand while also taking into consideration extenuating circumstances and the nature of the work of the employee and how it relates to the overall mission of the agency. This could be done in conjunction with the IRS.
There is no doubt that this issue warrants discussion and debate, but we at FMA believe a solution to the problem may be realized through greater oversight and enforcement of tax laws currently in place. If these rules are deemed too lenient, an expansion of new tax rules and regulations that do not isolate the obligations of federal employees from the rest of the American public should be required. An expansion of the authority to garnish wages should also be considered. No one should be allowed to evade paying taxes that are owed according to law, a point we can all agree upon. Singling out our nation’s civil servants, however, is not the answer.
Thank you again for the opportunity to express our views before the Subcommittee and I am happy to answer any questions you may have.