IRS Awarded Contracts to 20 Companies that Owed Taxes

Wednesday, January 12, 2011
Not only does the federal government not bother to check if a company owes federal taxes before awarding a contract—but even the IRS fails to perform this duty when it hires businesses to perform a service for the agency. In both instances, federal offices are failing to follow a directive from President Barack Obama to make sure contractors are not making money off the government while owing back taxes.
In the case of the IRS, 15% of its current contractors doing at least $250,000 worth of business with the agency (20 out 135) owe a total of $5.2 million in unpaid taxes, according to the inspector general for tax administration.
The problem lies in the way federal rules are written. The government can check a company’s tax status before it’s awarded a contract for the first time—but the same review cannot be done when a contract is renewed. So a business that falls into delinquency during the course of a contract can skate by and keep getting its deal renewed.
-Noel Brinkerhoff
At Least 20 IRS Contractors are Tax Delinquents (by Michael Cohn, Accounting Today)
Report Finds IRS Does Business with Tax Delinquents (by Robert Brodsky, Government Executive)


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