But with cost-cutting under way, which includes 900 job losses, the ATO has been forced to get serious about the thousands of empty desks it is paying for.

As part of the economy drive, senior executives were asked this week to consider early retirement, with generous incentives to do so on offer.

Sub-letting and ''consolidation'' moves are now in motion or in the planning phases and staff around the country are facing a nervous Christmas wondering where they might be sent to work in the new year.

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In Melbourne, at the new Collins Square Docklands offices, the department is looking to give office space to another government agency, less than two years after it moved in 2300 workers.

ATO bosses will appear at a parliamentary inquiry on Friday morning to explain plans to spend $21 million on a new office building in Dandenong, in Melbourne's south-eastern suburbs.

In south Sydney, 540 Tax Office workers at Hurstville face nervous times; speculation is rife that the ATO will close their crumbling building and shift the operation to distant Parramatta.

On the Gold Coast, about 90 workers in an ageing Southport office block fear they could be offered a choice: go to work 75 kilometres to the north in Brisbane or take a redundancy.

The ATO has made it clear it will not announce its decision on the future of Hurstville or Southport until the end of this month.

The uncertainty has prompted the Australian Services Union to demand some answers from the tax commissioner, Chris Jordan.

''The ATO's decision about whether to retain offices in these locations has major consequences for the affected staff,'' union official Jeff Lapidos wrote.

''We are worried and anxious about its impacts upon us. The problem is aggravated by rumours that are spreading about what has been decided.

''We think the ATO's refusal to bring its staff into its confidence is inconsiderate and may well breach the consultative provisions of the ATO enterprise agreement.''

In a statement, the Tax Office defended its payments for empty desks, saying they might be needed for work peaks during tax time.

''The number of work points needed across the ATO fluctuates depending on the time of year. Currently we have approximately 4700 vacant work points across our office locations nationally,'' a spokeswoman said.

''Traditionally we have needed a significant number of extra work points to manage the increase in temporary staff during tax time.''

The spokeswoman said the office had improved its vacancy rates in recent years.

''We have reduced vacancy over the past few years while still ensuring we are able to meet the demands of the community,'' she said.

''When considering vacant work points, we look at our business needs and value for money.

''As lease expiry opportunities present themselves, we work with landlords to reduce any excess space as part of a new lease agreement.''