Better Pay Your Taxes

Soon, disputes with the IRS on tax matters could impact contractors' ability to secure Federal contracts.

On January 20, 2010, the White House issued a memo to Executive Agencies noting that federal contracts are awarded to thousands of companies with serious tax delinquencies. The total amount of unpaid taxes owed by these companies is estimated to be more than $5 billion.

“Studies by the Government Accountability Office have identified tens of thousands of such dead-beat companies that are being awarded government contracts,” Obama said. “One company owner who owed over $1 million in taxes was paid over $1 million as a defense contractor — and instead of using that money to pay his back taxes, he chose to buy a boat, some cars, and a home abroad with his earnings. The total amount owed in unpaid taxes by companies like that is estimated at more than $5 billion.”

Obama went further to call on Congress to pass legislation to allow the IRS to share information about tax delinquency with contracting officials. The President also said that he would reintroduce a budget proposal that would delay payment to a tax-delinquent contractor until after taxpayers are paid back in full.

The President directed the IRS to review certifications of non-delinquency in taxes that companies bidding for Federal contracts are required to submit per the Federal Acquisition Regulations and report back to the President in 90 days on the overall accuracy of contractor certifications.

Additionally, the President directed the OMB (Office of Management and Budget) to review existing procedures and make recommmendations to ensure contractors with serious tax delinquencies are not awarded Federal contracts. He is also looking for a plan to make this information available in a Government-wide database.