GAO: Billions in stimulus contracts went to tax delinquents
Tuesday, May 24, 2011
GAO: Billions in stimulus contracts went to tax
delinquents
By: Bernie Becker, The Hill
A Senate panel on Tuesday will examine how more than $24 billion
in stimulus funds went to contractors or organizations that owe the
federal government millions in back taxes.
A new report issued by
the Government Accountability Office (GAO) found 3,700 contractors
and grantees that received stimulus funds owed a combined $757
million in back taxes.
"That such a huge amount of the stimulus money went to known tax
cheats should be a wakeup call for Congress," said Sen. Tom Coburn
(R-Okla.), one of the five lawmakers who requested the
report.
Coburn and Sen. Carl Levin (D-Mich.) are scheduled to hold
a Senate Permanent Subcommittee on Investigations hearing on the
matter Tuesday afternoon. Coburn and Levin
released some of the report's findings in
advance of the hearing.
Levin noted that the executive branch had already stressed that
contractors could be denied certain awards if they had not paid
taxes.
"Now the executive branch should get on with it and actually
debar the worst of the tax cheats from the contractor workforce,"
he said.
The stimulus, which cost an estimated $787 billion when it was
approved by Congress, is credited by the White House and most
Democrats with preventing a deeper recession. Republicans, however,
railed against the measure, noting that unemployment and the
nation's debt rose after it was approved.
Sens. Max Baucus (D-Mont.), the chairman of the Senate Finance
Committee; Orrin Hatch (R-Utah), the panel's ranking member; and
Chuck Grassley (R-Utah), the ranking member on the Senate Judiciary
Committee, also called for the report from the GAO, Congress's
investigative arm.
GAO signaled that the problem of stimulus funds going to those
with outstanding tax bills was probably broader than it had
identified.
In all, investigators looked at 63,000 taxpayers and
organizations, finding that close to 6 percent of them owed back
taxes. Roughly a third of the tax debts were from before 2003, well
before the stimulus package was enacted.
The report also discusses, among other cases, a nonprofit owing
more than $2 million in payroll taxes that was awarded more than $1
million in stimulus funds. The nonprofits's chief executive was
also known to have made numerous trips to a casino.
In another case, a security company cited for labor violations
and dubbed uncooperative by the IRS received a contract worth more
than $100,000, despite owing more than $9 million in taxes.