GAO: Contractors owe $3 billion in taxes

[The Straight Story]

GAO: Contractors owe $3 billion in taxes

By Kimberly Palmer
[e-mail]

The Government Accountability Office said Thursday that 33,000 contractors owe more than $3 billion in unpaid taxes.

The report (GAO-05-637) investigated 50 civilian agency contractors more closely and found that all of them had "abusive and potentially criminal activity," auditors said. It reported that businesses failed to forward the payroll taxes they collected from their employees to the IRS, which is a felony. On Thursday, GAO officials declined to identify the contractors, citing privacy issues. A spokesman said, however, that the agency will refer the contractors to the IRS for potential investigation.

In one case, a contractor repeatedly opened new businesses and closed old ones that carried large tax debts for more than 20 years. Federal agencies paid that contractor $1 million in fiscal 2004, despite the fact that he owed almost $900,000 in taxes. In another case, a waste collection agency that contracts with the Veterans Affairs Department owes almost $13 million in taxes and the owner has property worth more than $2 million.

GAO auditors said the Treasury Department's Financial Management Service, which disperses and collects money for the government, mismanaged data related to tax collection and in some cases was not even aware of problems until GAO pointed them out. In fiscal 2004, FMS paid $3.8 billion to contractors without recording their proper name, the report stated.

http://www.govexec.com/dailyfed/0605/061605k1.htm

[The Backlash Cometh]

1. Oh, those wacky Libertarians.

First at the public trough, but the last to pay taxes.

[rateyes]

2. That's what happens here in Georgia, a lot...

a contractor does a job, hires a bunch of subs--gets money from their clients, a bunch of "change orders"---stiffs the subs, does shoddy work on the project---gets sued---declares bankruptcy---starts another contracting company under another name. And, get this, they do not even have to hold a license to do business.

[The Backlash Cometh]

3. I hear Georgia is really bad when it comes to contracting work.

My sympathies.