Thousands of Non-Defense Contractors Owe Taxes

Inquiring minds have just read about how thousands of federal contractors working for civilian government agencies owe more than $3 billion in unpaid taxes. A few of the examples:

Thousands of federal contractors working for civilian government agencies together owe more than $3 billion in unpaid taxes, according to a report to be released today by a Senate subcommittee.

In one case, the owner of a firm that provides security guards to the Department of Homeland Security transferred payroll taxes withheld from workers’ paychecks to a foreign bank account instead of the government and used the money to build a house overseas.

The owner of another company, one that supplies health care services to the Department of Veterans Affairs and the Department of Health and Human Services, piled up more than $18 million in unpaid payroll taxes while buying multimillion-dollar properties and luxury vehicles.

And one contractor that furnishes temporary workers to the Department of Housing and Urban Development has owed back taxes for nearly two decades, simply closing businesses and starting new ones when the bills get too high.

Steps are being taken to fix this:

To help fix the problem, the GAO recommended changes at the Treasury Department’s Financial Management Service, which is responsible for helping to collect delinquent taxes from contractors before they get paid. FMS Commissioner Richard L. Gregg acknowledged the need for improvement but said his bureau “has a track record that clearly demonstrates” it can do the job.

“I don’t know what’s more appalling, the actions of 33,000 contractors or the current system, which precludes federal agencies from knowing whether they are contracting with habitual tax delinquents,” said a senior congressional aide who spoke only on condition of anonymity because the report had not been formally released.

“You think if there’s anyone paying their taxes it should be contractors making money off of Uncle Sam,” said Keith Ashdown, vice president for Taxpayers for Common Sense, a government watchdog group in the District. “It’s outrageous.”

Yeah, you’d think that if you were making money on Taxpayers then you would want to pay the required taxes.


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