Friday, June 17, 2005

Contractors evade taxes to the tune of $3 billion, GAO reports

The Hill

Federal civilian contractors owe more than $3 billion in unpaid taxes, according to an unreleased Government Accountability Office (GAO) report provided to The Hill.

The report, requested by Senate Permanent Subcommittee on Investigations Chairman Norm Coleman (R-Minn.), ranking member Carl Levin (D-Mich.) and other committee members, will be made public during a committee hearing today.

In its findings, the GAO uncovered 33,000 examples of tax evasion among federal civilian contractors. Together, the contractors owe $3.3 billion in unpaid taxes — mostly in payroll taxes — and continue to receive lucrative contracts from agencies such as the Departments of Justice, Homeland Security and Veterans Affairs.

“The widespread tax cheating by federal contractors will end,” Coleman said in a statement. “Step by step we are identifying and closing the loopholes that have allowed federal contractors to cheat on their taxes.”

The hearing is the second in what is likely to be a series of hearings on the subject. The first, in February 2004, focused on defense contractors.

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