Contractor Crackdown: tax cheats targeted by White House

Wednesday - 1/20/2010, 7:13am EST

By Jason Miller
Executive Editor
Federal News Radio

President Barack Obama is scheduled to sign a new directive today cracking down on tax cheats getting federal contracts.

In addition, the President will also instruct the Internal Revenue Service to review the "overall accuracy of companies' claims about tax delinquency to be sure that when a company says it's paying taxes, it's not lying," the White House said in a statement released ahead of the President's daily schedule.

In a memo from the White House, President Obama cites the need for such action

"This is not simply a matter of signing a piece of paper or taking a bureaucratic act. By issuing this directive, all of us in Washington will be required to be more responsible stewards of your tax dollars. All across this country, there are people who meet their obligations each and every day. You do your jobs. You support your families. You pay the taxes you owe - because it's a fundamental responsibility of citizenship."

Sources say the directive stems from the Government Accountability Office's work over the last three years looking at different abuses of the federal tax system by contractors.

In a July 2008 report, GAO said the "IRS's records showed that over 1.6 million businesses owed over $58 billion in unpaid payroll taxes, including interest and penalties. Of that amount, 70 percent of all unpaid payroll taxes are owed by businesses with more than a year (4 tax quarters) of unpaid federal payroll taxes, and over a quarter of unpaid payroll taxes were owed by businesses that accumulated tax debt for more than 3 years (12 tax quarters)."

GAO also looked at whether Medicare providers and grant recipients avoided paying federal taxes.

Additionally, Sen. Chuck Grassley (R-Iowa) in December called for federal contractors' tax records to undergo more scrutiny.

And the House in April 2008 passed a bill that would have established a policy that no U.S. government contracts or grants should be awarded to individuals or companies with seriously delinquent tax debts. The bill also would have required agencies to require prospective contractors to certify that they do not have such a debt and authorize the Secretary of the Treasury to disclose information describing whether they have such a debt.

Then-Sen. Obama sponsored the companion bill, but it never made it out of committee.


White House memo: http://www.federalnewsradio.com/docs/TaxDelinquencyMemorandum.docRemarks of President Barack Obama - As Prepared for Delivery - Tax Delinquency Memorandum

White House press release: President Obama Directs Administration to Crack Down on Tax Cheats Seeking Government Contracts

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