GSA Contractors Who Cheat On Their Taxes And What Should Be Done About It

The Permanent Subcommittee on Investigations held a third hearing on federal contractors with unpaid tax debt.  On February 12, 2004, the Subcommittee held a hearing entitled DOD Contractors Who Cheat on Their Taxes, which examined the IRS’ failure to collect $3 billion in unpaid taxes owed by contractors doing business with the Department of Defense (DOD) and getting paid with taxpayer dollars. On June 16, 2005, the Subcommittee held a hearing entitled Civilian Contractors Who Cheat On Their Taxes, which identified an additional $3.3 billion in unpaid taxes and demonstrated that the problem of tax delinquent federal contractors is not confined to DOD. Because of the potential revenue that could be collected by the Federal Payment Levy Program from non-DOD contractors, the Subcommittee expanded the coverage of the investigation to include contractors at other federal agencies who receive federal contract payments and are delinquent in paying their taxes. In the continuing investigation of federal contractors who do not pay their taxes, the Subcommittee held a hearing on March 14th on the General Service Administration’s contractors who are tax delinquent. Federal contractors who owe taxes are still allowed to do business with the federal government. The hearing explored the extent to which these contractors are tax delinquent and what can be done about it.