Report: Stimulus Recipients Owe Hundreds Of Millions In Taxes

May 24, 2011

In a report released today, the Government Accountability Office says thousands of companies that received money from the American Recovery and Reinvestment Act of 2009 owe the U.S. government hundreds of millions in unpaid taxes.

Here's the key paragraph from the report's summary:

At least 3,700 Recovery Act contract and grant recipients — including prime recipients, subrecipients, and vendors — are estimated to owe more than $750 million in known unpaid federal taxes as of September 30, 2009, and received over $24 billion in Recovery Act funds. This represented nearly 5 percent of the approximately 80,000 contractors and grant recipients in the data from as of July 2010 that we reviewed. The estimated amount of known unpaid federal taxes is likely understated because IRS databases do not include amounts owed by recipients who have not filed tax returns or understated their taxable income and for which IRS has not assessed tax amounts due.

The GAO report says that the office refered 15 serious cases to the Internal Revenue Service. Six of them, the report says, have agreed to pay back taxes.

The Washington Post reports that the GAO's findings do not affect whether the companies can continue to work the the government:

Federal law doesn't prohibit contractors with unpaid federal taxes from doing business with the federal government, and federal contracting officers are not required to consider a company's tax delinquency unless it is already debarred or suspended for tax evasion, according to GAO.

Sen. Tom Coburn (R-Okla.) and other lawmakers are pushing legislation that would bar tax-delinquent firms from conducting business with the government.

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