Tax & Budget Policy News

Bill Requiring Federal Contractors to Pay Taxes Awaits Vote in the House

Washington, DC – As Americans make their final preparations to submit tax forms to the IRS, Congress will consider a bill this month to bar thousands of federal contractors that owe unpaid taxes from receiving additional federal dollars. According to studies by the Government Accountability Office (GAO), compliance with tax laws is not yet considered in awarding federal contracts decisions, and a number of delinquent contractors owe more than $7.5 billion in unpaid taxes.

The Contracting and Tax Accountability Act, which would withhold large federal contracts from businesses and organizations that fail to file tax returns and are delinquent on their taxes, passed the House Committee on Oversight and Government Reform last month and awaits a vote in the House in April.

“This Congress was elected on promises of accountability, transparency, and good governance, and this bill provides an excellent opportunity for our leaders to back up those promises,” said John Krieger, a staff attorney at the US Public Interest Research Group. (USPIRG)

While government agencies are required to consider various criteria, including financial resources, business ethics, and integrity, in awarding federal funds, a contractor with seriously delinquent tax debt is not disqualified. On the contrary, current law prohibits contracting officers from accessing contractors’ tax data from the IRS.

Facing no penalty for non-compliance, corporations continue to receive government funds despite delinquent, and sometimes criminal, tax practices. The GAO report also notes that several CEO’s and VIP’s from companies collect payroll taxes and withholdings from their employees and then redirect those funds for personal gain, to pay off gambling debts, purchase luxury cars and mansions, and, even, to buy a sports franchise.

“This is a common sense reform. Americans pay their taxes and they expect corporations that receive millions from the federal government will do the same,” said Krieger.

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Click here to ask Speaker Pelosi to bring this bill to the House floor for a vote.