Financial Management: Some DOD Contractors Abuse the Federal Tax System with Little Consequence
This report determines: (1) the magnitude of unpaid federal taxes owed by U.S. Dept. of Defense (DoD) contractors; (2) whether indications exist of abuse or criminal activity by DoD contractors related to the federal tax system; (3) whether DoD and the Internal Revenue Service (IRS) have effective processes and controls in place to use the Treasury Offset Program (TOP) in collecting unpaid federal taxes from DoD contractors; and (4) whether DoD contractors with unpaid federal taxes are prohibited by law from receiving contracts from the federal government. Includes testimony by Gregory D. Kutz and Steven J. Sebastians, Dir., Financial Mgmt. and Assurance, and John J. Ryan, Assist. Dir., Office of Special Investigations, GAO. Charts and tables.
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$1 million abuse the federal abuse the tax abusive or potentially Accounting Office amount of unpaid audit and investigation billion in unpaid businesses and individuals CCR database Central Contractor Registration collecting unpaid taxes collection action contracting officers contractor registering contractors that abuse Contractors with Unpaid DCIA DFAS DOD and IRS DOD contractors effective tax levy employees employer identification entering the levy federal government federal payments federal tax system federal taxes owed Financial Management fiscal year 2002 FPLP governmentwide identified implementation income taxes individuals that abuse installment agreement Internal Revenue Service IRS records IRS's levy program military MOCAS nearly $3 billion offer in compromise owed by DOD owner potentially criminal activity prospective contractors receiving federal contracts responsible September 30 sole proprietorship tax debt tax evasion tax liens filed tax periods tax returns TOP database U.S. General Accounting unpaid federal taxes unpaid payroll taxes vendor payment systems
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Page 32 - Unpaid tax assessments consist of (1) taxes due from taxpayers for which IRS can support the existence of a receivable through taxpayer agreement or a favorable court ruling (federal taxes receivable); (2) compliance assessments where neither the taxpayer nor the court has affirmed that the amounts are owed; and (3) write-offs, which represent unpaid assessments for which IRS does not expect further collections due to factors such as the taxpayer's death, bankruptcy, or...
Page 15 - The law imposes no penalties upon an employee for the employer's failure to remit payroll taxes since the employer is responsible for submitting the amounts withheld. The Social Security and Medicare...
Page 5 - Styles, administrator of the Office of Federal Procurement Policy in the Office of Management and Budget, (also a CAP member,) said that some agencies have sent so much work to the private sector that they are unable to provide effective oversight of the contracted work.
Page 67 - We will also make copies available to others upon request. In addition, this report will be available at no charge on GAO's Web site at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7114 or email@example.com.
Page 3 - We considered activity to be abusive when a contractor's actions or inactions, though not illegal, took advantage of the existing tax enforcement and administration system to avoid fulfilling federal tax obligations and were deficient or improper when compared with behavior that a prudent person would consider reasonable.
Page 6 - Spending at the next three largest federal agencies, the Department of Energy (DOE), the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA), represented only about half of the remaining 34 percent of federal contract awards during the same period.