Bill Cracks Down on Tax Delinquent Contractors

NTEU applauded a congressional effort aimed at preventing the award of government contracts to private companies that fail to meet their federal tax obligations.

In April, the House approved H.R. 4881, the Contracting and Tax Accountability Act of 2007, which would prohibit private sector companies with seriously delinquent federal tax debts from receiving new government contracts.

“This measure clearly is in the best interest of America’s taxpayers,” said NTEU President Colleen M. Kelley, who has been leading the fight against the more than seven-year efforts of this administration to turn over federal work to the private sector—including the inherently governmental function of collecting taxes. “It is certainly past the time that this outrageous practice needs to be ended,” she added.

Periodically, the Government Accountability Office (GAO) reports on aspects of contractor accountability and behavior, including the fact that tens of thousands of private companies continue to obtain government contracts despite having federal tax delinquencies, often in considerable amounts.

In the past, GAO has identified the existence of billions of dollars in such unpaid taxes, most commonly in the form of payroll taxes withheld from employees but not turned over to the Internal Revenue Service. Under present privacy laws, however, agencies—even if they know about it—are prevented from sharing that information.

H.R. 4881, introduced by Rep. Brad Ellsworth (D-Ind.), seeks to address this glaring injustice by requiring contractors to certify they do not have a seriously delinquent tax debt; and, in the event there is such a debt, would authorize the Treasury Department to disclose such information to contracting agencies.

Oversight and Government Reform Committee Chairman Henry Waxman (D-Calif.) described that goal as “simple common sense.” During House debate on the measure, he added: “The federal government should not be granting federal contracts to companies that won’t pay their taxes.”

President Kelley has pointed to the nonpayment or underpayment of tax obligations as one major way private companies seek to gain an advantage in the public-private competition for an increasing amount of federal work. Others include paying their employees low wages and providing substandard or no benefits, such as health insurance.

What You Can Do

• Voice your opposition to runaway federal contracting in a letter to the editor of your newspaper.

• Legislation has been introduced in the House and Senate that would stop the IRS tax debt privatization program. Click here to support the Taxpayer Abuse and Harassment Prevention Act (H.R. 695), introduced by Rep.Van Hollen. Click here to support the Private Tax Collection Prohibition Bill (S. 335), introduced by Sens. Byron Dorgan (D-ND) and Patty Murray (D-Wash.).

Are You Inherently Governmental?

If you are a federal employee whose job function has shown up on the commercial side of your agency’s FAIR Act list, challenge it. Click here for NTEU’s Inherently Governmental Matrix that will help you determine if your position should move from a commercial designation to an inherently governmental designation.