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Saturday, September 18, 2010

Tax Gap in Congress

In case you missed, the Washington Post ran a story on 9/9/10 - "Capitol Hill employees owed $9.3 million in back taxes last year, data show" by T.W. Farnum. It details (without names) how much in back taxes is owed by people who work for Congress including in the Office of Government Ethics. Here is an excerpt:

"638 employees, or about 4 percent, of the 18,000 Hill workers owe money.
The average unpaid tax bill is $12,787 among the Senate's delinquent taxpayers and $15,498 among those working in the House."

What is surprising to me is how many government jobs (apparently most) do no require the applicant to show that they are up to date in paying their taxes. When I worked for the IRS years ago, I had 3 years of tax returns audited as part of the hiring process. I'm not saying that every government job applicant needs to be audited, but there should be a requirement to check that they have filed their federal and state income tax returns. State applicants should be required to also show they paid their use tax!

Also, we should be asking those running for federal, state and local offices to show they have paid their income and use taxes. I mean "we the public" should be asking.

Why not also have an annual check to be sure workers are up to date with tax filings and if not, offer help in getting them filed - referrals to VITA sites, for example.

When paid return preparers register to get their PTIN this month, they will need to confirm that they are current with their filings. At some point, the system won't issue the applicant a PTIN if they have not filed their federal tax return.

Two bills have been introduced in the Senate to address this problem. S. 3790 would make people with "seriously delinquent" tax debt ineligible for federal employment. S. 3791 would "require Members of Congress to disclose delinquent tax liability, require an ethics inquiry, and garnish the wages of a Member with Federal tax liability."

I think these bills are good ideas. As Congress talks about reducing the tax gap, they should be sure that their members and those working to create and support federal laws are following them. Lead by example. And, there are approaches available to most delinquent taxpayers, such as installment agreements, to get past due taxes paid.

What do you think?

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