The June 16th hearing was the second hearing the Permanent Subcommittee on Investigations held on tax delinquency problems with federal contractors. On February 12, 2004, the Subcommittee held a hearing entitled “DOD Contractors Who Cheat on Their Taxes And What Should Be Done About It” which examined the Department of Defense’s (DOD) failure to levy contractor payments for unpaid taxes owed by contractors doing business with DOD and getting paid with taxpayer dollars. The February 2004 hearing also demonstrated that the problem of tax delinquent federal contractors may not be confined to DOD. The Chairman, Ranking Member and other interested Members of the Subcommittee requested that the Government Accountability Office (GAO) determine if federal contractors at civilian agencies were tax delinquent. At the June 16th hearing, the Subcommittee presented the results of this expanded investigation. Additionally, the GAO releasied two reports which were requested by the Subcommittee on this matter. The first report covered the extent of tax debt among civilian contractors. The second report covered the extent to which the federal government and the states have entered into reciprocal agreements to collect delinquent federal or state taxes.
Director, Forensic Audits and Investigative Services
U. S. Government Accountability Office
Internal Revenue Service