Senators Braun Introduce Federal Employees and Retirees with Delinquent Debt Initiative (FERDI) Act

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 U.S. Senator Mike Braun (R-IN) and U.S. Senator Joni Ernst (R-IA) have introduced the Federal Employees and Retirees with Delinquent Debt Initiative (FERDI) that would prohibit taxpayer dollars to pay the salaries of individuals who refuse to pay their taxes.

“Those who cheat from Uncle Sam and have a significant delinquent debt to the IRS should not be able to accept a paycheck from the federal government until they pay their delinquent tax bill, and this legislation will fix this problem,” said U.S. Senator Mike Braun.

“Federal employees owe billions in delinquent taxes. That’s unacceptable. This common sense legislation would help hold Washington bureaucrats more accountable,” said Senator Joni Ernst.

RATIONALE

In 2015, the Internal Revenue Service issued a copy of the Federal Employees and Retirees with Delinquent Debt Initiative (FERDI) and reported that current and retired government employees owe over $3 billion in delinquent taxes. Taxpayer dollars should not pay the salaries of individuals who refuse to pay taxes themselves. Therefore, this bill would prevent individuals with significant unpaid tax liability ineligible for federal employment. Additionally, the FERDI is not published on a regular basis. By annually publishing the FERDI, policy makers and practitioners will be better prepared to track and collect taxes from federal employees.

FERDI:

  • The FERDI program was developed in 1993 to promote federal tax compliance among current and retired federal employees. The program incorporates the purpose and intent of Office of Government Ethics regulation 5 CFR. 2635.809, which addresses the responsibility of federal employees to “satisfy in good faith their obligations as citizens, including all just financial obligations, especially those such as federal, state or local taxes that are imposed by law”.
  • FERDI outlines tax delinquencies across agencies by civilian employees and the military, both active and retired. It outlines the tax delinquencies of all executive agencies and large independent agencies. It also shows the delinquencies of Congress, staff and Members, and of those in the Judicial branch.
  • Numbers in the FERDI includes the number of employees who are delinquent on their taxes, the balance owed, and the delinquency rate.

FERDI ACT: 

  • The bill would prohibit those with significant unpaid tax liability from employment with the federal government.
  • The bill exempts federal employees or applicants working to settle their tax debt and resolve outstanding liabilities, and provides a financial hardship exemption if the individual’s service is in the best interests of the United States.
  • While created in 1993, the FERDI has been published inconsistently by the IRS. The last FERDI was published in 2015. This lack of consistency has alleviated the pressure on agencies to hold their employees accountable. The FERDI Act would mandate that the IRS publish the FERDI annually.
  • The report would be distributed to relevant committees in Congress, including the Senate Committee on Finance, House Committee on Ways and Means, Senate Committee on Homeland Security and Governmental Affairs, and House Committee on Oversight and Reform.

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