Any serious meaningful reform of the Internal Revenue Service (IRS)...

Editor's note: ...faces resistance not only because of tax policy itself, but because the IRS's enormous institutional bureaucratic structure now depends on its continued perpetuation. Tens of thousands of employees, private subcontractors (many who are former IRS employees), compliance firms, consultants, and technology vendors all draw salaries and long term benefits from a system financed by taxpayers, creating powerful incentives to preserve bureaucratic complexity rather than reforming the IRS or demolishing it all together and replacing it with a more equitable and alternative tax system. Every layer of bureaucratic administration generates its own economic and financial constituency (the IRS's discretionary operating budget of about $12.3 billion for fiscal year 2024), making large scale reform almost impossible because entire careers, pension systems, benefits and government aligned industries are financially dependent on the IRS's bureaucratic structure. Then there is also the issue of the IRS employees (90,516 full-time employees) coming under the National Treasury Employees Union and the broader network of federal employees tied to the agency who have a direct institutional interest in protecting jobs, benefits, perks, insurance, staffing levels, and the long term expansion of the existing tax bureaucracy.
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Tax Delinquency Increasing Among Federal, Retired Employees, IRS Watchdog Reveals

By Naveen Athrappully | May 11, 2026

(The Epoch Times)—Tax noncompliance among federal employees and retirees has increased over recent years, partly due to the suspension of certain collection programs during the COVID-19 pandemic, according to a May 6 report from the Treasury Inspector General for Tax Administration (TIGTA).

Data from the Internal Revenue Service's (IRS) federal delinquency initiative (known as FERDI) shows that "the overall delinquent balance owed by federal employees and retirees increased by more than $1.5 billion (32 percent) between FY 2021 and FY 2024," TIGTA said.

"The federal and retiree workforce decreased by less than one percent from FY 2021 through FY 2024. However, there was a significant increase of 43 percent in the number of delinquent federal employees and retirees during the same period."

As of 2024, "there were more than 571,000 current federal and retired employees with an outstanding tax obligation owing approximately $6.3 billion."

According to the IRS Collection management, the annual increase in taxes owed by current federal employees and retirees was due to temporary pauses in three initiatives during the COVID-19 pandemic and recovery years—collection notice issuance, levy programs, and the Automated Substitute for Return program, which is an enforcement tool to deal with nonfilers.

In August 2024, the IRS started a phased resumption of levy programs, with the agency anticipating that delinquency rates will decline over the upcoming years, the report said.

To address noncompliance among current federal employees and retirees, IRS Collection created Notice LT36 in May 2025. The letter encourages such people to voluntarily pay off their tax dues. By July 14, 2025, around 427,000 of these letters were sent by the IRS.

As of August 2025, around 59,000 LT36 recipients had made a payment, with 4,700 taxpayers paying off their outstanding balances in full. In total, the IRS collected $58 million following the issuance of these notices.

In the report, TIGTA cited a letter sent by Sen. Chuck Grassley (R-Iowa) to the Acting IRS Commissioner last year, which expressed concerns about high delinquency rates among current federal employees and retirees.

"All federal employees have a heightened responsibility to follow the laws and rules and pay their taxes," Grassley said in the April 2, 2025.

"Taxpayers deserve to be assured that federal employees, whose salaries and benefits are funded through taxpayer dollars, are held to account by the IRS for failing to pay their tax obligations, just like the rest of Americans are held to account."

Grassley cited the 2023 FERDI report and highlighted that, as of May 2023, 4 percent of IRS employees had not fully paid their tax balances.

IRS Employee Non-Compliance

In 2024, TIGTA published a report detailing its auditors' assessment of IRS employees. According to the report, out of the 85,359 employees at the IRS, 3,414 had unpaid taxes of around $21 million.

In addition, among IRS contractors, many of whom are former agency employees, 10 percent had outstanding taxes of roughly $25 million.

Please go to The Liberty Daily to continue reading.

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Here are the far larger and deeper structural circumstances: "These thieves have been illegally, unlawfully, immorally soaking the American Public for $4.7 Trillion dollars worth of phony income taxes per year. And harassing, jailing, fining, and levying bank accounts of people and businesses that never owed these thugs a dime":

The Identity of the Perpetual Debtor

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