IRS Pub 5735 – IRS Forms, Instructions, Pubs 2026 – In today’s complex tax landscape, federal employees and retirees face unique responsibilities to maintain compliance with U.S. tax laws. IRS Publication 5735, also known as the Federal Employee/Retiree Delinquency Initiative (FERDI), serves as a crucial resource for promoting timely tax filing and payment among this group. Updated as of January 2026, this publication outlines ethical obligations, practical tools, and strategies to avoid delinquency. Whether you’re a current federal worker, a retiree, or an employer in the public sector, understanding FERDI can help ensure you meet your tax duties and avoid potential penalties.
This guide breaks down the essentials of IRS Pub 5735, including its purpose, key features, consequences of non-compliance, resolution steps, and recent developments. By staying informed, federal employees can navigate tax season with confidence and maintain their status as compliant public servants.
What is the Federal Employee/Retiree Delinquency Initiative (FERDI)?
The Federal Employee/Retiree Delinquency Initiative (FERDI) was established by the IRS in 1993 to enhance tax compliance specifically among current and retired federal employees, including military personnel, Department of Defense workers, and annuitants. FERDI operates as a dedicated program to identify, educate, and resolve tax delinquencies using data from payroll and pension systems.
At its core, FERDI emphasizes that federal employees have an ethical duty under the Standards of Ethical Conduct for Employees of the Executive Branch to file accurate tax returns on time and pay any owed amounts in full. This initiative not only collects unpaid taxes but also promotes year-round tax awareness through educational resources, reminders, and tools provided in IRS Pub 5735. It applies to all federal civilians, military members (active duty, National Guard, and Reserves), and retirees, highlighting that public service comes with heightened accountability in tax matters.
FERDI’s approach includes integrating tax compliance education into new employee orientations, pre-retirement seminars, and ongoing communications from federal agencies. By fostering a culture of compliance, the program aims to reduce delinquencies and ensure the federal workforce sets a positive example for the general public.
Key Highlights from IRS Publication 5735
IRS Pub 5735 is a comprehensive guide revised in January 2026, focusing on filing season tips, resources, and ethical reminders for federal employees and retirees. Here’s a breakdown of its main sections:
- Purpose and Ethical Obligations: The publication stresses the importance of year-round tax planning, as decisions throughout the year impact your tax liability or refund. Federal employees must disclose all income, file on time, and pay in full, aligning with public service ethics.
- Filing and Payment Tips: It recommends electronic filing (e-filing) and direct deposit for faster refunds—status updates are available within 24 hours for e-filed returns versus up to four weeks for paper ones. There’s no penalty for late filing if you’re due a refund, but you must file within three years of the due date to claim it.
- Resources for Retirees: Special sections address tax situations for seniors, including references to Publication 4190 (Tax Guide for the Retiree) and Publication 721 (Tax Guide to U.S. Civil Service Benefits). Retirees are encouraged to use IRS.gov for tailored information.
- Free Filing Options: Eligible individuals (income $89,000 or less) can use the IRS Free File Program. Military members and veterans have access to MilTax for free e-filing.
- Online Tools and Assistance: Pub 5735 promotes IRS digital services like online accounts for balance checks, payment agreements, and paperless notifications. Interactive tools include Chat Bots, Voice Bots, and the Interactive Tax Assistant for quick answers.
- Social Media and Updates: Stay connected via the IRS2Go app, YouTube videos, and social platforms like Facebook, LinkedIn, Instagram, and X (formerly Twitter). Subscribe to email lists for the latest tax news.
This publication empowers federal employers to support their staff by sharing these resources, ultimately reducing the risk of delinquency.
Consequences of Tax Delinquency for Federal Employees and Retirees
Tax delinquency can have serious repercussions for federal workers. According to recent data, delinquencies among civilian federal employees and retirees have risen significantly, from 218,494 individuals owing $2.4 billion in 2019 to 297,341 owing $3.4 billion in 2023—a 40% increase in unpaid taxes. Agencies like the U.S. Postal Service and Department of Veterans Affairs show the highest amounts owed.
Consequences include:
- Levies and Garnishments: The IRS can levy up to 15% of wages, pensions, or other federal payments without the usual notice periods afforded to non-federal taxpayers.
- Employment Risks: Proposed legislation like S.1011 (FERDI Act) seeks to disqualify individuals with delinquent tax debt from federal employment and requires annual IRS reports on such liabilities.
- Notices and Enforcement: In 2025, the IRS sent LT36 notices to approximately 525,000 current and retired federal employees urging immediate action on unpaid debts or unfiled returns. Failure to respond can lead to escalated collection actions affecting paychecks and benefits.
These measures underscore the IRS’s commitment to holding federal personnel to a higher standard, as non-compliance could undermine public trust in government.
How to Resolve Tax Delinquencies Under FERDI?
If you’re facing tax issues, IRS Pub 5735 provides clear paths to resolution:
- File Overdue Returns: Use e-filing tools and the Interactive Tax Assistant to submit as soon as possible.
- Set Up Payment Plans: Apply for an Online Payment Agreement to manage balances affordably.
- Seek Professional Help: Choose authorized tax preparers from the IRS Directory of Federal Tax Return Preparers. For complex cases, consult a tax attorney or enrolled agent.
- Respond to Notices Promptly: If you receive an LT36 notice, address it immediately to prevent further enforcement.
- Utilize Free Resources: Leverage IRS.gov, Publication 17 (Your Federal Income Tax), and the IRS Services Guide for guidance.
Acting quickly can prevent escalation and help restore compliance.
Recent Developments in FERDI and Tax Compliance
In recent years, FERDI has intensified efforts amid rising delinquencies. A 2023 TIGTA report highlighted the need for better prioritization of federal nonfilers, prompting IRS improvements like programming fixes to keep cases active. The 2025 LT36 notice campaign targeted over half a million individuals, using payroll and pension data for identification.
Senator Chuck Grassley’s 2025 inquiry called for annual public FERDI reports to increase transparency. Additionally, the IRS continues to assess program effectiveness, with historical data showing higher delinquency rates among military annuitants (around 6.1% in early 2000s), leading to targeted education initiatives.
These updates reflect the IRS’s ongoing commitment to reducing the $3.4 billion in unpaid taxes from federal sources as of 2023.
Download IRS Publication 5735
To access the full details, download the latest version of IRS Pub 5735 directly from the official IRS website: https://www.irs.gov/pub/irs-pdf/p5735.pdf. This PDF provides in-depth guidance tailored for federal employees and retirees.
Final Thoughts on FERDI and Tax Compliance
IRS Publication 5735 and the FERDI program play a vital role in upholding tax integrity within the federal workforce. By promoting education, timely action, and accessible tools, they help prevent delinquencies and their associated consequences. If you’re a federal employee or retiree, review your tax situation regularly and utilize IRS resources to stay compliant. Remember, compliance isn’t just a legal requirement—it’s part of serving the public with accountability. For personalized advice, visit IRS.gov or consult a tax professional.