Washington, D.C. — More than $24 billion in stimulus funds went to contractors and grantees who owed the government hundreds of millions of dollars in tax debts, according to a new report from the Government Accountability Office (GAO). GAO identified 3,700 contractors and grantees who received stimulus funds, despite collectively owing the government $757 million in back taxes. The investigative report, which came at the request of Senators Tom Coburn, Carl Levin, Charles Grassley, Max Baucus and Orrin Hatch, will be released at a hearing tomorrow of the Senate Permanent Subcommittee on Investigations.
Coburn said, “It is a matter of basic fairness that those who take government money should be required to pay their taxes like everyone else. That such a huge amount of the stimulus money went to known tax cheats should be a wakeup call for Congress.”
Levin said, “For many years now, we’ve known that a small percentage of federal contractors and grantees who get paid with taxpayer dollars shirk their responsibility to pay their taxes. We’ve strengthened the levy program to recover more funds from them, and the executive branch has made it clear nonpayment of tax can be grounds for denying a specific contract or debarring a contractor from bidding on any contract. Now the executive branch should get on with it and actually debar the worst of the tax cheats from the contractor workforce.”
GAO investigators noted that the findings of the investigation likely understate the full extent of the problem. The Subcommittee will examine possible solutions, including the need for legislation to prevent those with known significant tax debts from obtaining federal grants and contracts.
What: “Stimulus Contractors Who Cheat on Their Taxes: What Happened?”
When: Tuesday, May 24, 2011 2:30 p.m.
Where: Dirksen Senate Office Building, Room 342
Witnesses: Mr. Gregory Kutz, Director, Government Accountability Office
Mr. Dan Gordon, Director, Office of Federal Procurement Policy, OMB