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Washington, D.C.—A report by the Treasury Inspector General for Tax Administration (TIGTA) underscores the double standard that exists between IRS employees and IRS contractor employees: IRS employees must file their returns on time and pay their tax debts, while hundreds of contractor employees owe millions in taxes but continue to work for the IRS.

The TIGTA report found that as of June 14, 2012, 691 of the 13,591 contractor employees reviewed owed $5.4 million in back taxes, and more than half were not on a payment plan to resolve those debts.

“Employees are held to a very strict standard, even in cases of personal hardship. If they fail to file on time or pay their tax debts, they face disciplinary action, including removal,” said President Colleen M. Kelley of the National Treasury Employees Union (NTEU). “The IRS has the same requirement for contractors, but they are monitored with much less frequency,” only once every five years, according to TIGTA.

NTEU has long advocated limiting the number of contractor employees at the IRS due to reasons of cost, information security and accountability. “At a time when the IRS is furloughing employees for lack of funding, why is it continuing to employ thousands of contract employees who probably cost more and hold them to lesser standards? No one does the work of the federal government better or is more accountable than federal employees,” said President Kelley.

The source of many of the current challenges at the IRS can be directly tied to the severe funding problems at the agency. The IRS budget has been cut by $1 billion, or roughly 10 percent, in the last two years and its workforce has 8,000 fewer employees than just one year ago.

“Drastic budget cuts at the IRS have likely affected the agency’s ability to stay on top of enforcement of the contractor compliance issue, just like these cuts are affecting so many other critical IRS functions,” said the NTEU leader. “This has a serious detrimental effect on services, enforcement and ultimately the nation’s deficit.”

Yesterday, the IRS announced that it will delay the start of the filing season by up to two weeks as a result of the 16-day government shutdown. That action, coupled with lack of resources at the agency, will likely delay tax refunds.

As the nation’s largest independent federal union, NTEU represents 150,000 employees in 31 agencies and departments.