[Senate Report 113-272]
[From the U.S. Government Publishing Office]
Calendar No. 596
113th Congress } { Report
SENATE
2d Session } { 113-272
_______________________________________________________________________
AMENDING TITLE 5, UNITED STATES CODE, TO PROVIDE THAT PERSONS HAVING
SERIOUSLY DELINQUENT TAX DEBTS SHALL BE INELIGIBLE FOR FEDERAL
EMPLOYMENT
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 1045
AMENDING TITLE 5, UNITED STATES CODE, TO PROVIDE THAT
PERSONS HAVING SERIOUSLY DELINQUENT TAX DEBTS SHALL BE INELIGIBLE FOR
FEDERAL EMPLOYMENT
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
November 13, 2014.--Ordered to be printed
_____
U.S. GOVERNMENT PRINTING OFFICE
49-010 WASHINGTON : 2014
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota
Gabrielle A. Batkin, Staff Director
John P. Kilvington, Deputy Staff Director
Mary Beth Schultz, Chief Counsel
Lawrence B. Novey, Chief Counsel for Governmental Affairs
Keith B. Ashdown, Minority Staff Director
Christopher J. Barkley, Minority Deputy Staff Director
Andrew C. Dockham, Minority Chief Counsel
Joelle Cannon, Legislative Aide, Office of Senator Coburn
Laura W. Kilbride, Chief Clerk
Calendar No. 596
113th Congress } { Report
SENATE
2d Session } { 113-272
======================================================================
AMENDING TITLE 5, UNITED STATES CODE, TO PROVIDE THAT PERSONS HAVING
SERIOUSLY DELINQUENT TAX DEBTS SHALL BE INELIGIBLE FOR FEDERAL
EMPLOYMENT
_______
November 13, 2014.--Ordered to be printed
_______
Mr. Carper, from the Committee on Homeland Security and Government
Affairs, submitted the following
R E P O R T
[To accompany S. 1045]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 1045), to amend
title 5, United States Code, to provide that persons having
seriously delinquent tax debts shall be ineligible for Federal
employment, having considered the same, reports favorably
thereon with amendment in the nature of a substitute and
recommends that the bill, as amended, do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis of the Bill, as Reported.............4
V. Evaluation of Regulatory Impact..................................4
VI. Congressional Budget Office Estimate.............................5
VII. Changes in Existing Law..........................................6
I. Purpose and Summary
S. 1045 would make most individuals with seriously
delinquent federal tax debt--generally defined as a tax debt
for which the government has filed a public lien--ineligible to
work for the federal government.
II. Background and Need for the Legislation
With most federal salaries generally derived from taxes
paid by the American people, federal workers have a special
responsibility to meet their tax obligations. The vast majority
of federal workers do just that. However, some do not.
According to the Internal Revenue Service's (IRS's) annual
Federal Employee/Retiree Delinquency Initiative (FERDI) report
for 2013, 116,169 civilian federal employees owed
$1,084,201,015 in federal back taxes in 2013.\1\ This figure
represents a delinquency rate of 4.07%.\2\
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\1\See Internal Revenue Service, Federal Employee/Retiree
Delinquency Initiative (FERDI) Report, 2013.
\2\Ibid. Further, a July 2014 report by the Government
Accountability Office (GAO)--``Tax Debts Owed by DoD Employees and
Contractors''--revealed that about 83,000 Department of Defense (DOD)
military and civilian employees and contractors who had been determined
eligible for secret, top secret, or sensitive compartmented information
clearances had unpaid federal tax debt totaling more than $730 million
as of June 30, 2012. Of these, about 44,500 were DOD employees, though
the report does not indicate how many of them were military (who would
not be covered under this bill) and how many civilian (who could be
covered under this bill, if they have seriously delinquent tax debt and
meet other conditions). GAO, ``Security Clearances: Tax Debts Owed by
DOD Employees and Contractors,'' GAO-14-686R, July 28, 2014, at pages
10, 16 of the enclosure, http://www.gao.gov/products/GAO-14-686R.
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Currently, employees of the Internal Revenue Service can be
terminated for having seriously delinquent tax debt.\3\ S. 1045
requires all agencies to adopt this common-sense approach by
requiring that they notify employees with seriously delinquent
tax debt that they must immediately repay the debt or enter a
repayment program. If within 150 days of receiving the notice,
the employees have not repaid the debt, entered a repayment
program, or otherwise offered evidence to the agency that their
tax debt is not seriously delinquent, the agency will terminate
their employment. In a case where employment is terminated
under the legislation for these reasons, the employee may apply
for review of the proposed termination under an applicable
procedure, appeal, or grievance process to which the employee
would be entitled generally in the case of a proposed
termination of the individual's employment.
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\3\PL 105-206, section 1203.
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The bill also provides for an exemption, so that, if an
individual's employment would otherwise need to be terminated,
the head of the employing agency may determine, in his or her
discretion that the individual's continued service is in the
best interests of the United States. The making or not making
of such a determination would not be subject to review.
S. 1045 also prohibits anyone with seriously delinquent tax
debt from entering the federal workforce. The legislation
requires agencies to ensure that job applicants certify, under
penalty of perjury, that they do not owe seriously delinquent
tax debt as of the date that the certification is made. S. 1045
prohibits the agency from hiring an applicant who does not make
that certification.
Each agency will also offer a process under which a job
applicant who is denied employment under the legislation may
appeal to bring to the agency's attention any factual errors
made in determining that the applicant did not make the
required certification. S. 1045 allows each agency to decide
what kind of review to make available for this purpose, and the
Office of Personnel Management could, under its general
authority, consider whether it would be desirable for the
Director to establish any government-wide guidance or
standards.
While S. 1045 aims to bring about greater tax compliance
among the federal workforce, it also recognizes unforeseen
circumstances or financial hardship can happen to even the most
law abiding citizens. S. 1045 defines ``seriously delinquent''
very specifically. An employee does not owe ``seriously
delinquent'' tax debt if he or she is in the process of
repaying the debt in a timely manner, or if a hearing or appeal
is pending or ongoing. In addition, if a levy has been issued
on the tax debt or if a financial hardship exemption has been
granted, the tax debt is not ``seriously delinquent''.
The Committee notes that the House of Representatives
considered similar legislation, H.R. 249, in April of 2013.
Although a majority of members voted in favor of the
legislation, the bill did not pass the House, because it was
considered on the suspension calendar, where a two-thirds vote
is required. The vote was 250 in favor and 159 against, which
was 23 yea votes less than the necessary two-thirds.\4\
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\4\See 159 Congressional Record H2012 (daily edition April 15,
2013).
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Opponents argued that the legislation was unwarranted,
citing that the tax delinquency rate for federal employees is
less than half that of the general public, mechanisms already
exist to collect back taxes from federal employees and to
discipline those who do not pay, and termination of
individuals' employment may make it more difficult to collect
unpaid taxes from them.\5\
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\5\See 159 Congressional Record H2004-H2010 (daily edition April
15, 2013). See also, Kelley, Colleen, National Treasury Employees
Union, Letter to Congressional Representatives, April 8, 2013, http://
www.secunion.org/files/LtrtoHouseonHR249492013.pdf.
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This Committee, however, contends legislation to further
push higher tax compliance rates for federal employees is
needed. The over a billion dollars in tax debt owed by federal
employees is not an insignificant sum and demands attention.
The Committee wants to make clear that individuals who choose
not to pay their federal tax debt, after being given numerous
options to do so, should not be rewarded with federal
employment. Federal salaries are derived from federal taxes,
and it is incumbent on those in federal service to set an
example.
Further, S. 1045 provides a number of due process
provisions and exemptions for financial hardship, making sure
to focus on the seriously tax delinquent federal employees who
chronically refuse to pay what they owe.
III. Legislative History
On May 23, 2013, Senator Coburn introduced S. 1045, with
Senator Pryor as a cosponsor. The bill was referred to the
Committee on Homeland Security and Governmental Affairs.
The Committee considered S. 1045 at a business meeting on
May 21, 2014. Senators Coburn and Pryor offered a substitute
amendment which differentiated processes for current and
prospective federal employees, requiring prospective employees
to certify they do not possess seriously delinquent tax debt.
For current employees, the substitute amendment includes
specific timelines for agencies and employees to act, and
includes specific exemptions and due process provisions for
employees or prospective employees against whom adverse action
is taken. The Committee adopted the substitute and then ordered
the bill, as amended, favorably reported, both by voice vote.
Senators Carper, Pryor, Landrieu, McCaskill, Tester, Begich,
Coburn, Johnson, Portman, and Enzi were present for both votes.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1(a) adds a new Subchapter VIII to Chapter 73 of
title 5 and defines the terms ``agency'', ``Code'', ``Federal
employee, and ``seriously delinquent tax debt''. ``Seriously
delinquent tax debt'' is defined as any tax debt owed for which
a public lien has been filed, with certain exceptions. Those
exceptions include a debt that is being repaid through an
arranged repayment agreement, a debt for which a hearing or
appeal is pending or ongoing, a debt for which the IRS has
already issued a levy for repayment, or a debt for which relief
has been otherwise granted.
Section 1(b)(1) prohibits any applicant for federal
employment with seriously delinquent tax debt from working for
the federal government or being appointed to federal
employment.
Section 1(b)(2)(A) requires an agency to provide written
notice to a current federal employee if the employee has
seriously delinquent tax debt. The employee has 150 days from
the date of the notice to begin repaying the debt.
Section 1(b)(2)(B) requires the agency to notify an
employee who has seriously delinquent tax debt and has not
begun repaying the debt within the 150-day deadline that they
must repay the total amount or enter a repayment program within
60 days from when the notice is received, or be terminated from
employment.
Section 1(b)(2)(C) allows an exemption for federal
employees who do not comply if the head of the employing agency
determines that the employee's continued service is in the best
interests of the United States.
Section 1(b)(2)(D) provides terminated employees with
applicable appeal, review, and grievance procedures provided by
current law, if they are terminated for failing to repay their
seriously delinquent tax debt in full or for failing to enter a
repayment program to begin paying back the seriously delinquent
tax debt.
Section 1(c) requires the head of an employing agency to
require applicants to certify, under penalty of perjury, that
they do not possess a seriously delinquent tax debt. It
prohibits the employing agency from hiring someone who does not
make such a certification. It further requires the head of an
employing agency to establish a fair and efficient appeals
process for employees who are denied employment for not making
the certification.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact that would be incurred in
carrying out this legislation and determined that there is no
regulatory impact within the meaning of the rule. The Committee
further agrees with the Congressional Budget Office there are
no intergovernmental or private-sector mandates as defined in
the Unfunded Mandates Reform Act and no costs on State, local,
or tribal governments.
VI. Congressional Budget Office Estimate
June 5, 2014.
Hon. Tom Carper,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1045, a bill to
amend title 5, United States Code, to provide that persons
having seriously delinquent tax debts shall be ineligible for
federal employment.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 1045--A bill to amend title 5, United States Code, to provide that
persons having seriously delinquent tax debts shall be
ineligible for federal employment
Under S. 1045, individuals with federal tax debt that is
seriously delinquent would be ineligible to be appointed or to
continue serving as an employee of the federal government. The
legislation defines tax debt to be seriously delinquent if a
public lien has been filed. Tax debt that is being repaid in a
timely manner, is part of a requested or pending collection-
due-process hearing, or whose repayment the Department of
Treasury determines would cause financial hardship, would not
be considered seriously delinquent. Federal agencies would be
required to have job applicants certify that they do not have
such debt. Current federal employees would have 150 days after
receiving their outstanding debt notice to enter into
agreements to resolve their debt in order to remain eligible
for continued employment.
Based on information from the Office of Management and
Budget, the Internal Revenue Service, and staff of the Joint
Committee on Taxation (JCT), CBO estimates that implementing S.
1045 would cost less than $500,000 annually, subject to the
availability of appropriated funds, mostly to create and
administer certification forms.
Pay-as-you-go procedures apply to the bill because it would
affect direct spending and revenues. Agencies not funded
through annual appropriations, such as the Tennessee Valley
Authority and Bonneville Power Administration, would face some
additional costs (as described above), but CBO estimates that
any net increase in direct spending by such agencies would not
be significant. JCT estimates that enacting the bill would have
a negligible effect on revenues.
S. 1045 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on budgets of state, local, or tribal
governments.
On April 11, 2013, CBO transmitted a cost estimate for H.R.
249, the Federal Employee Tax Accountability Act of 2013, as
ordered reported by the House Committee on Oversight and
Government Reform. Both bills address delinquent taxes of
federal employees, however, the House bill would authorize
agencies to review tax records. The estimated costs reflect the
differences between the bills.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was approved by Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
VII. Changes in Existing Law
In compliance with section 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill
as reported are shown as follows: Existing law proposed to be
omitted is enclosed in [black brackets], new matter is printed
in italic, existing law in which no change is proposed is shown
in roman:
UNITED STATES CODE
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart F--Labor-Management and Employee Relations
* * * * * * *
CHAPTER 73--SUITABILITY, SECURITY, AND CONDUCT
SUBCHAPTER I--REGULATION OF CONDUCT
SEC.
7301. PRESIDENTIAL REGULATIONS.
* * * * * * *
SUBCHAPTER VIII--INELIGIBILITY OF PERSONS HAVING SERIOUSLY DELINQUENT
TAX DEBTS FOR FEDERAL EMPLOYMENT
7381. INELIGIBILITY OF PERSONS HAVING SERIOUSLY DELINQUENT TAX DEBTS
FOR FEDERAL EMPLOYMENT.
* * * * * * *
Subchapter VIII--Ineligibility of Persons Having Seriously Delinquent
Tax Debts for Federal Employment
Sec. 7381. Ineligibility of persons having seriously delinquent tax
debts for Federal employment.
(a) Definitions.--In this section--
(1) the term ``agency'' means--
(A) an Executive agency;
(B) the United States Postal Service;
(C) the Postal Regulatory Commission; and
(D) an employing authority in the legislative
branch;
(2) the term ``Code'' means the Internal Revenue Code
of 1986;
(3) the term ``Federal employee'' means an employee
in or under an agency, including an individual
described in section 2104(b) or 2105(e);
(4) the term ``seriously delinquent tax debt'' means
an outstanding debt under the Code for which a notice
of Federal tax lien has been filed in public records
pursuant to section 6323 of the Code, except that such
term does not include--
(A) a debt that is being paid in a timely
manner pursuant to an agreement under section
6159 or section 7122 of the Code;
(B) a debt with respect to which a collection
due process hearing under section 6330 of the
Code, or relief under subsection (a), (b), or
(f) of section 6015 of the Code, is requested
or pending;
(C) a debt with respect to which a levy has
been issued under section 6331 of the Code (or,
in the case of an applicant for employment, a
debt with respect to which the applicant agrees
to be subject to a levy issued under that
section if employed by an agency); and
(D) a debt with respect to which relief under
section 6343(a)(1)(D) of the Code is granted.
(b) Ineligibility for Federal Employment.--
(1) In general.--Except as provided in paragraph
(2)(C), an individual who has a seriously delinquent
tax debt shall be ineligible to continue serving as a
Federal employee or, subject to subsection (c), to be
appointed as a Federal employee.
(2) Federal employees.--
(A) In general.--A Federal employee who has a
seriously delinquent tax debt shall have 150
days after the date of written notice by the
agency employing the Federal employee to begin
repaying the debt in a timely manner pursuant
to an agreement under section 6159 or 7122 of
the Code.
(B) Failure to begin repaying seriously
delinquent tax debt in a timely manner.--If a
Federal employee who has a seriously delinquent
tax debt does not begin repaying the debt in a
timely manner pursuant to an agreement under
section 6159 or 7122 of the Code during the
period specified in subparagraph (A), the head
of the employing agency of the Federal employee
shall--
(i) notify in writing the Federal
employee that, not later than 60 days
after the date on which the Federal
employee receives the notification, the
Federal employee shall--
(I) repay the total amount of
the seriously delinquent tax
debt of the Federal employee;
or
(II) begin repaying the debt
in a timely manner pursuant to
an agreement under section 6159
or 7122 of the Code; and
(ii) except as provided in
subparagraphs (C) and (D), terminate
the Federal employee if the Federal
employee does not comply with the
requirements of a notice issued under
clause (i).
(C) Exemption.--A Federal employee who does
not comply with the requirements of a notice
issued under subparagraph (B)(i) may continue
serving as a Federal employee if the head of
the employing agency of the Federal employee
determines that the continued service of the
Federal employee is in the best interests of
the United States.
(D) Procedure.--Chapter 75, any other
applicable provision of law, and appeal, review
or grievance procedures to which the employee
is entitled shall apply to a termination under
subparagraph (B)(ii).
(c) Applicants.--The head of an agency--
(1) shall take appropriate measures to ensure that
each individual that submits an application for
employment with the agency certify (as part of the
application) under penalty of perjury as provided in
section 1746 of title 28 that the individual does not
have a seriously delinquent tax debt (as of the date on
which the certification is made);
(2) may not employ any individual who does not make
the certification described in paragraph (1)(C); and
(3) shall establish an appeal process for individuals
denied employment under paragraph (2).
[all]