WASHINGTON – thousands of companies who have cashed in on the economic stimulus plan of President Barack Obama to the Government millions of unpaid taxes, Congressional investigators have found.
The Government Accountability Office, in a report being released Tuesday, said at least 3,700 contractors of the Government and the non-profit organizations that received more than $ 24 billion to the effort of stimulus to 757 million dollars in back taxes from September 30, 2009the end of the fiscal year.
The report said tax offenders accounted for 6% of the 63 000 contractors and grantees examined and warned that the actual number could be higher because the known tax liability does not factors such as underreporting of income measure.
Among the examples is an engineering firm which received a $100,000 of Act stimulus contract but to 6 millions of dollars in taxes. The IRS called "an extreme case of non-compliance". A social services non-profit which has received more than $ 1 million in stimulus funds owed taxes of $ 2 million.
GAO referred to these two cases and 13 others to the IRS for further investigation.
Tuesday, a Subcommittee of the Senate homeland security and governmental affairs will hold a hearing on the report.
Federal law does not prohibit the tax offenders to obtain government contracts or grants, although there are provisions that allow the Government to withhold payments in some cases. Although the Federal Government requires the contractors to submit documentation that their taxes are paid, some recipients escaped Federal review because the money has been disbursed to the State or local level.
Senator Carl Levin, D-Mich., Chairman of the Subcommittee investigations the hearing, said that we know for years on some federal contractors and grantees pay their taxes.
He said a program to retrieve funds from tax delinquents has been strengthened, and "the Executive power has clear" that the non-payment of the tax may be grounds for refusing a specific contract or preventing a contractor to bid on any contract. He added that the Executive should "get on with it" and bar "the worst tax cheats the contractor workforce."
"It is a matter of fundamental fairness that those who take the money from the Government should be required to pay their taxes as everyone else," said Senator Tom Coburn of Oklahoma, top of the Republican group. "That such a huge amount of stimulus money went to fraudsters known should be a wake-up call for Congress." ?
Stimulus, enacted in February 2009, spilled $ 821 billion into the recession-hit economy. Of this, approximately $ 275 billion was designated for contracts and grants, of which almost $ 200 billion was paid March 25, 2011.
The report points out that about 35% of the unpaid taxes were for debts contracted before 2003 and more than half of apparent violations, $ 417 million, were unpaid corporate tax. Another quarter, $ 207 million, came the unpaid contributions.
The most serious documented case is a firm security owed $ 9 million, mainly in unpaid contributions since the mid-2000s. Documents from the IRS has indicated that the company has paid other creditors all to shirk its tax obligations. The company, which received more than $100,000 in stimulus money, had a story to be little cooperative, missing deadlines and deposit several times of calls, according to the records.
Senator Max Baucus, D-Mont., Chairman of the Finance Committee, said that each dollar of unpaid tax was "added to our deficit, or taken to future generations, so I will certainly use the conclusions of this report to look for new ways to ensure that everyone pays their fair share."
For the Republicans, the report provided another way to criticize the recovery of the Obama package. "This shows how fundamentally flawed stimulus failure proved to be when Washington jams through almost a trillion dollars in spending with little control," said Senator Orrin Hatch, Utah, top Republican on the Senate Finance Committee.
Moira Mack, a spokesman for the Office of Management and Budget, which oversees the program, said his Agency last year has raised more than 100 million of tax debts and intensified its efforts to prevent offenders from receiving federal contracts tax.
"Companies seeking federal contracts are now required to certify if they have an important tax delinquency and this requirement is deter tax offenders to obtain federal contracts," said Mack. "These efforts are consistent with the measures taken by the law on the recovery of this administration to provide an unprecedented level of accountability and transparency for the American taxpayer."
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