House Passes Bill to Limit Hiring of Contractors that Refuse to Pay Federal Taxes

Published: Apr 15, 2015

The Contracting and Tax Accountability Act [H.R. 1562], introduced by House Oversight and Government Reform Committee Chairman Jason Chaffetz, was approved by an overwhelming majority in the U.S. House of Representatives.This legislation would prohibit the award of contracts or grants to corporations or individuals with seriously delinquent tax debt

“If you have unaddressed tax delinquency issues, you should not be awarded government contracts or grants. It is a privilege to be entrusted by the American taxpayer with key functions of our federal government. It is antithetical to use taxpayer resources to fund contractors who aren’t fulfilling their own tax responsibilities. This bill is a common sense way to ensure that we prioritize law-biding taxpayers above those who are skirting their legal duty to pay taxes,” said Jason Chaffetz.

The Government Accountability Office has found that thousands of federal contractors have substantial amounts of unpaid federal taxes. For example, in its 2007 report, GAO found that about 27,000 DOD contractors owed $3 billion, 33,000 civilian agency contractors owed $3.3 billion, and 3,800 GSA contractors owed $1.3 billion. In 2013, the Treasury Inspector General for Tax Administration reported there were 1,168 Internal Revenue Service contracts that owed a combined $589 million in delinquent taxes. Similar debts were found amongst contractors in other agencies as well.