Federal Employee Tax Problems: Are They Favored By The IRS?
by: Anthony Parent
If you, as a federal employee, were expecting favoritism from the IRS, well, you were wrong. Federal employee tax problems get the harshest treatment possible.
If you are receiving a salary or pension from the federal government, you are classified as a FERDI Case - which stands for Federal Employee/ Retirement Delinquency Initiative In a FERDI case, the IRS gives little or no leniency when it comes to Federal employee tax problems.
If you have delinquent returns, you are expected to file them NOW, now being whenever they contact you. For a non-FERDI taxpayer, the IRS will hold off on levy action and give you 2 weeks to 1 month to get the returns prepared and submitted. Not so for federal employees or federal retirees.
If you owe money, you are expected to pay or get into a payment plan NOW. For a non-FERDI taxpayer, the IRS will often grant extensions of time to allow you to hire counsel, put together a resolution proposal, put together financials, etc. Not so for federal employees or retirees.
If a federal employee or retiree submits an Offer in Compromise, that Offer is far more likely to be disallowed for public policy reasons or as being "Not in the best interests of the government."
How IRS employees are treated by the IRS in a FERDI case
IRS Employees get it even worse. Their case can't be handled by just anyone. It has to be assigned to an "experienced" Revenue Officer with another Revenue Officer serving as back-up. Extra checks have to be performed to make sure that there are no conflicts of interest - we don't to assign a case to a Revenue Officer who goes out drinking with the IRS employee who owes taxes. If an IRS employee is lucky enough to get an Installment Agreement, it MUST be through a payroll deduction.
The one group that gets to catch a break: If you are serving in active service in a combat zone you can get a break in filing and payment deadlines and a break from garnishments and liens. However, the clock will stop running on your collection statute expiration date while the IRS is waiting. Additionally, for those who give their all and die in service in an active conflict, their tax liabilities will be forgiven.
Yes, there are different "rules" for politicians and political appointments regarding Federal employee tax problems. For instance, Charlie Rangel is a federal employee but was given a wink and a nod for not reporting $500,000 in foreign income that would likely put a regular federal employee in jail, or at least fired.
So in a way, Federal Employees have it the worst --- there is a perception that they get special favors, but in actuality, those without political juice, get the most scrutiny, and can face the harshest punishments. If you need assistance, contact us to set up a free consultation.