Senators Lash Out at Cos. Who Owe Taxes
June 16, 2005
By THE ASSOCIATED PRESS
Filed at 10:28 a.m. ET
nytimes.com
WASHINGTON (AP) -- Senators called on the federal government Thursday to ban contracts with companies that owe back taxes, after a report found that thousands of civilian contractors owed $3.3 billion in unpaid taxes.
''Under these circumstances, we must bar certain companies and individuals from receiving federal contracts,'' said Sen. Norm Coleman, R-Minn., chairman of the Permanent Subcommittee on Investigations, which was holding a hearing on the issue.
''When individuals or companies demonstrate flagrant disregard for the tax system through a pattern of repeated and continued abuse, it is appropriate to publish their names and bar their receipt of federal contracts,'' Coleman said.
The panel was meeting to discuss a report by the Government Accountability Office which found that 33,000 civilian contractors owed the government roughly $3.3 billion in taxes.
Internal Revenue Service Commissioner Mark W. Everson and Dick Gregg, commissioner of the Treasury Department's Financial Management Service bureau, were scheduled to testify at the hearing.
The report was requested by Coleman, who has vowed to end the problem. The GAO, Congress' investigative arm, issued a similar report for defense contractors last year, finding that 27,000 of them owed $3 billion in unpaid taxes.
In its latest report, the GAO concluded that FMS, the bureau responsible for government payments and debt collection, has poorly managed a program that authorizes agencies to withhold payments from delinquent contractors....
...Investigators audited 50 cases as part of its latest investigation, choosing companies with unpaid taxes of more than $100,000 and federal payments of more than $10,000.
''We found abusive and potentially criminal activity related to the federal tax system for all 50 cases that we audited and investigated,'' the GAO said.
It found that all 48 companies that filed business tax returns collected taxes from employees but did not send them to the IRS.
''Rather, these companies diverted the money to fund business operations, for personal gain, or for other purposes,'' the GAO said.
Because of privacy laws, the GAO does not identify any of the delinquent taxpayers, a restriction that also hampers federal agencies from knowing if they are dealing with delinquent contractors.
But the GAO reported that some owners of the delinquent companies had ''substantial personal assets,'' including $30 million in real estate, a sports team and multiple luxury vehicles. |
