Delinquent on your taxes? You can still get a federal contract!

Federal contractors receive an estimated $377.5 billion in taxpayer funds, and now the IRS inspector general reports that the tax agency isn't bothering to complete tax checks and financial capability surveys before awarding contracts. According to a new report, the Treasury Inspector General for Tax Administration (TIGTA) reviewed 135 contractors with an award equal to at least $250,000. Fifteen percent (20) of those reviewed had delinquent tax liabilities totaling $5.2 million. And tax checks were not completed for seven of those 20 contractors.

In other words, 13 contractors still got awards despite being known to be delinquent.

From the report

TIGTA believes IRS contractors should be held accountable to the same tax compliance requirements as IRS employees.  If IRS employees fail to file accurate and timely income taxes, it can result in disciplinary action, and even loss of employment.

Guidelines do not require IRS employees to complete tax checks or financial capability surveys at the time a contract is up for renewal.  Our analyses showed the IRS renewed the contracts for 17 contractors, of which six had delinquent tax liabilities that totaled over $943,000 at the time of the original award.<span>  As of March 2009, the delinquent tax liabilities increased by more than 500 percent to approximately $4.9 million.

Despite this finding, the IRS disagrees with the Inspector General's recommendation to conduct annual tax checks on all contractors to identify subsequent tax delinquencies.

Beltway ConfidentialIRSTreasury DepartmentUS

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