Pentagon Contractors Owe $7.7 Billion in Unpaid Taxes

[fat mike]

http://www.truthout.org/docs_2006/043007J.shtml

Since much of what the federal contractors owe the IRS arises from withholding taxes for employees, said the GAO, they actually gain a competitive advantage over other contractors from not paying. That results from the tax-delinquent contractors having more money readily available so they can post lower bids for federal work, the GAO inquiry revealed.

But the GAO said that neither the federal agencies hiring contractors nor federal officials paying out Medicare fees to its doctors, health professionals or medical suppliers have the legal tools to collect back taxes owed by them. The Internal Revenue Service is not permitted to communicate with other federal agencies about what taxes federal contractors or medical suppliers and doctors receiving Medicare fees owe. Federal law, the GAO concluded, needs enhancing to make sure the IRS and federal agencies have sufficient tools to ensure that federal contractors and Medicare doctors don't owe back taxes. "With the serious fiscal challenges facing our nation, the status quo is no longer an option."
On the other hand, the GAO said the IRS has for several years experienced trouble with its automated coding system to sort out tax delinquents. For example, said the GAO, in 2005 the IRS faultily excluded $2.4 billion in debt from its active tax-levy system.

"It certainly was shocking that the GAO continues to report the IRS's inability to collect back taxes from government contractors," said Peter Sepp, the National Taxpayers Union's vice president for communications. "Unlike the mythical $345 billion tax gap, these taxes are right under the government's nose. And, it should be no harder than sending a notice and docking the contractor. But, that's the federal government for you."

we got a choice between a party that's a handservant to the business community and a party that hates accountants and managers...