Thread: IRS seeks to levy TSP accounts of tax-delinquent feds

Mr Losey,

Of the 276,000 people, on average thats $10,800/pp. I would like to know three things:

1. How many of these people are in negotiations to pay the IRS?
2. Why the IRS hasn't garnished retirees payouts?
3. Have the current employee defaulters been removed from classified work areas?

It is trivial to go after their TSP. I would venture to guess the majority of people don't have accounts or have minimal account balances.

Also, 97K is less than 5% of employees. This seems like SWEEPing change to punish the many, instead of the few.

That why we beleive none of what they say. They want EVERYONES MONEY! It's desperate times and those in control take desperate measures.

They are not to be trusted in my book!

That's kind of silly - Isn't the IRS free to garnish wages on unpaid taxes? So why not just do that? Or are they trying to catch one term Congressmen?

On the little details?
So...does this work like a loan that you have to repay to your own retirement?
I assume the money's subject to tax, since it's only tax-deffered.

Does this extend to other retirement 401ks besides that of the Federal Government, or are we being singled out (is that discrimination)?

Originally Posted by Silverbird

On the little details?
So...does this work like a loan that you have to repay to your own retirement?
I assume the money's subject to tax, since it's only tax-deffered.

Right, Can they force you to withdrawal, take a tax hit, to pay taxes?

Can't wrap my head around it!

Frixxxx, Can't currently "make" you but they can apply enough pressure that you'll be happy to get the money out of the TSP or anywhere else it is stashed just to get them off your back. Realistically, if you have enough money left in the TSP it probably makes sense to take it from there as a loan since penalties and interest really add up on tax debt and the TSP loan has a low rate and you're paying yourself back. Change to allow levies against TSP funds is almost a moot point since anyone in Tax trouble probably has other debt and has already cleaned out the TSP kitty. More of a statement than an effective collection tool.

Originally Posted by Scout333

Frixxxx, Can't currently "make" you but they can apply enough pressure that you'll be happy to get the money out of the TSP or anywhere else it is stashed just to get them off your back. Realistically, if you have enough money left in the TSP it probably makes sense to take it from there as a loan since penalties and interest really add up on tax debt and the TSP loan has a low rate and you're paying yourself back. Change to allow levies against TSP funds is almost a moot point since anyone in Tax trouble probably has other debt and has already cleaned out the TSP kitty. More of a statement than an effective collection tool.

Scout, I think Silverbird has it.....They should just garnish wages. That is how they do it in the real world....why get creative with fed employees?

Good point Frixxxx, if employed that would likely be one of the first things they would go for. One of the pressure items I was talking about. Doesn't leave much for food and medicine. Could also affect retirees or others no longer currently working.

Originally Posted by Scout333

Good point Frixxxx, if employed that would likely be one of the first things they would go for. One of the pressure items I was talking about. Doesn't leave much for food and medicine. Could also affect retirees or others no longer currently working.

Scary part is they walk amongst us.....

Contact EAP, get out of trouble......negotiate and pay.

Retirees, I don't know how to fix them.

I've worked for the govt for 20 years, and been a Union rep for 10 of those years. I am aware of perhaps a half-a dozen employees who got into tax trouble over all that time.

In every case, it was somebody who had a major unexpected expense- like the guy who's sister had cancer and was out of money, and the brother cleaned out most of his TSP account to help her, and then the following year had a huge tax payment that he couldn't make. The hospital got it's 150K from the poor guy, but he ends up with the 40K tax bill the next year, and tries to make arrangements with the IRS, but he's technically on the list of those considered a tax delinquent. So they go after him with everything they can, and he tries to keep his job and still make all the payments.


Seen it many times.

Sure, a law allowing the IRS to get the person's remaining TSP dollars would collect some of that back- but it isn't going to change the fact that a certain percentage of people will show up as being a tax delinquent. Sometimes it just happens.

Should have filed for Insolvency.

Originally Posted by Frixxxx

Should have filed for Insolvency.

Sometimes I would say yes- or not taken out their TSP or 401(k) to cover something. But they do. The last one I had was a guy who lost his wife to cancer and incurred the debt in conjunction with that. When that kind of thing is going on, you don't always think straight.

Unfortunately, the first time I hear about such cases is usually the day they come in to do the disciplinary hearing for "failing to pay debts", which the penalty can be removal. Yes, they should have sought professional advice from a lawyer before incurring huge tax liabilities- but they don't. And they try and hold off things, only to pop up on the Agency's radar when they have a late payment on something- like their government credit card, which then triggers a credit report, which then uncovers the IRS debt, which then leads to double discipline charges- late on the credit card, and then failure to pay debts. Double whammy, a hearing, and then wham- they fire the person. Bad news all around.

My best advice to anyone is talk to a professional the minute something big comes along they haven't dealt with before- so they aren't getting themselves in a whole lot more than they bargained for.