Problems We Solve

Federal Employees & Tax Debt

The IRS is coming for its own.

If you work for the federal government or receive a federal pension, the IRS just put a target on your back.

In June 2025, the IRS began issuing LT36 notices to current and retired federal employees who had an outstanding tax issue as of April 30, 2025. Not a handful of people. Approximately 525,000 federal employees and retirees were identified as noncompliant with their federal tax obligations.

Half a million government workers. Active employees. Retirees drawing pensions. Military members. Postal workers. VA nurses. DoD civilians. People who have served this country for decades, now being told by the agency they work alongside that they're out of compliance.

What happens next depends entirely on what you do in the next few weeks. Not months. Weeks.

The Notice

What Is the LT36 Notice

The LT36 notice doesn't list a balance. It doesn't break down what you owe. It simply states that according to IRS records, you are one of approximately 525,000 current or retired federal employees who are noncompliant with federal tax obligations.

That's intentionally vague. And that vagueness is what makes it dangerous.

The notice directs you to log into your IRS account, check your balance, and resolve the issue "promptly." It quotes the Code of Federal Regulations, reminding you that federal employees are expected 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."

That's not friendly advice. That's the government telling you that your job and your tax debt are now linked.

The Program

What Is FERDI and Why It Matters

The LT36 notice is powered by a program most federal employees have never heard of: the Federal Employee/Retiree Delinquency Initiative (FERDI). It's an IRS program specifically designed to identify and collect delinquent tax debt from current and former federal employees by matching its taxpayer database with federal payroll and pension data.

FERDI has existed since 1993. But it's never been weaponized like this.

They Know Where Your Money Is

The IRS doesn't need to hunt for your paycheck. They issue it. They issue your pension. FERDI permits wage garnishment and pension withholding without the standard collection process that protects civilian taxpayers.

Automated Collection

Most FERDI cases are handled by the IRS's Automated Collection System unless the balance exceeds $1 million. A computer is making the collection decisions. No human reviewing your circumstances. No negotiation. Just an algorithm docking your check.

The 15% Levy

Under FERDI, the IRS can dock 15 percent of your pay or pension through the Federal Payment Levy Program — without a hearing or notice. Money taken from your paycheck before you ever see it.

The Turning Point

Why This Is Different Now

The LT36 Mass Mailing

The IRS has never sent a notice to 525,000 federal employees at once. This isn't a quiet program running in the background. This is a coordinated enforcement campaign, and it signals the IRS intends to follow through aggressively.

The OPM Connection

The Office of Personnel Management has proposed new regulations that would allow agencies to fast-track employee dismissal for ethical issues — including unresolved tax debt. What used to be a private financial problem can now become grounds for losing your federal career.

Under OPM's proposed rule, current federal employees would fall short of suitability standards if they fail to comply with "generally applicable legal obligations" — including filing and paying their taxes on time. The same category that covers criminal conduct and security violations.

Beyond Money

The Career Consequences Nobody Is Talking About

For a civilian taxpayer, unresolved tax debt means financial pain. For a federal employee, it can mean all of that plus the end of your career.

Security Clearances

Unresolved financial problems are one of the most common reasons clearances get denied or revoked. A tax debt flagged by the IRS is exactly the kind of issue that triggers a clearance review.

Disciplinary Action

If the IRS shares delinquency information with your employing agency, you could face disciplinary action, lose promotions, or be passed over for assignments.

Termination

With the new OPM suitability proposals, the path from "unresolved tax debt" to "separated from federal service" has gotten shorter. Especially acute for law enforcement, intelligence, or any role where financial reliability is a condition of employment.

In Scope

Who Is Most at Risk

While FERDI applies across the entire federal workforce, certain agencies report disproportionately high rates of tax delinquency. The U.S. Postal Service and Department of Veterans Affairs have some of the highest concentrations of affected employees.

Civilian employees (all agencies)

Civil service retirees

FERS retirees

Active duty military

Military retirees

National Guard & Reserve

Federal contractors

Federal vendors

Postal workers

If you receive a federal paycheck, pension, or contract payment — you're in scope.

Important

You Might Not Even Owe Anything

You can receive an LT36 notice even if you don't owe money. Simply not filing a required tax return can trigger the notice. IRS records are also not infallible — misapplied payments, incorrect calculations, notices sent to the wrong person, and tax liabilities created through identity theft can all generate a false positive.

But here's the trap: if you ignore the notice because you assume it's wrong, and it turns out you do owe something, the IRS treats your silence as noncompliance and escalates accordingly. Verification and response are not optional.

Service Members

Military Members: Special Protections Exist

If you're serving in a designated combat zone, collection activity is paused during your active service. The IRS will postpone certification and enforcement actions while you're deployed.

But those protections end when you come home. And if you've been deployed for multiple years with tax issues building in the background, the re-entry can be brutal. We've seen military members return from deployment to find years of penalties stacked up and collection actions queued.

If you're active duty, Guard, or Reserve with tax issues, the time to address them is now — while protections are in place, not after they expire.

The Triage

How We Handle Federal Employee Tax Cases

We understand the stakes are different for you. This isn't just about money. It's about your career, your clearance, your retirement, and your reputation.

Phase 1

Triage

We pull your IRS transcripts, verify whether the LT36 notice is accurate, and assess exactly what you owe or what returns are missing. If it's an error, we challenge it immediately. If it's legitimate, we map out the full scope before the IRS escalates.

Phase 2

Stabilize

We file missing returns, stop pending collection actions, and create a paper trail showing you took immediate, responsible action — which matters enormously if your clearance or employment is ever questioned.

Phase 3

Rescue

We negotiate the resolution. Federal employees face more scrutiny — the IRS holds you to a higher standard due to "public policy implications." We know how to navigate that higher standard.

Throughout the process, you don't talk to the IRS. You don't call the number on the LT36. You don't log in and start making payments before understanding the full picture. We handle it.

Why This Matters to Us

This Is Personal

Our family has served this country across four generations. My son Andrew is a Naval Academy graduate and practicing Enrolled Agent. His wife is an active Navy officer. I serve as a Blue and Gold Officer for the Naval Academy and Communications Officer for the Coast Guard Academy.

We didn't build this practice to collect fees. We built it because we understand what it means to serve — and we understand what it feels like when the system you've dedicated your career to turns its collection machinery on you.

Federal employees and military families deserve someone in their corner who understands both the tax code and the weight of service.

Your Move

You've Spent Your Career Serving the Government. Don't Let It Destroy What You've Built.

Call 909-570-1103 or go to TaxDebtTriage.com. If you received an LT36, tell us immediately. If you know you have unfiled returns or unpaid balances and you work for the federal government, don't wait for the letter.

Let us handle the IRS while you focus on the job you've dedicated your life to.

No obligation. Confidential. · 1255 W Colton Ave, Suite #535, Redlands, CA

About the Author

Carlos Samaniego, EA

NTPI Fellow and founder of Tax Debt Consultants LLC in Redlands, California. Carlos represents taxpayers before the IRS nationwide and before the California Franchise Tax Board statewide. He owed the IRS himself before he became an Enrolled Agent.

Published: August 5, 2026

Last updated: August 5, 2026

Verify credentials