Friday, 19 March 2010

Tax Woes

Some folks in the IRS sat down and did the statistics. Almost 100,000 civilian federal employees owe them (the IRS) almost a billion dollars ($962 million)...by way of back taxes.

Some senators and congressmen got into this mess and can't understand how or why.

Having come into this federal employee game in the past three months....allow me to offer some insight into this "game".

In the old days...you could be a GS-12/13 and take home a fair salary. You knew your limits, your credit, and your future goals. You lived typically within your dreams.

Somewhere over the past twenty years...people have extended themselves. But they did this because the salary levels for government employees....kept moving in a upward scale every single year.

So guys started to cut corners. They cut the amount that they pushed toward the IRS to hold. They started to look for special credits...which happened to get denied when the IRS finally dug deep enough two years later. So $6k here, and $3k there....eventually turned into $9k. Then they kept fighting these cases with lawyers who convinced them they could fight...and then eventually lost.

At this point...you start to double up. Guys who pulled $110k in salary year...and they screwed up badly to owe $20k or $40k.

How many of these federal workers are at the lowly GS-7 level? Few if any...I'm willing to bet. These are hefty guys who really guessed wrong on their tax issues and got deeply into debt.

As for the escape? Well...they could rig up a simple pay plan and cough up $12k a year easily....thus avoiding their 401K contribution for the year. The problem is that they really don't want to take such a drastic action.

Congress is likely going to settle this problem and just start taking their money....without much discussion. Life was pretty simple when the pay scales were all relative and kept to a reasonable growth situation. Today...it's challenging a guy to live beyond his means.