February 12, 2004   SENATOR COLLINS: DEFENSE CONTRACTORS WHO CHEAT ON THEIR TAXES MUST BE HELD ACCOUNTABLE Debarment from Contracting Should Be Considered   WASHINGTON, DC—During a subcommittee hearing today examining widespread tax avoidance and evasion by Defense contractors, Senate Governmental Affairs Committee Chairman Susan Collins (R-ME) said those contractors must be held accountable for their actions. “Federal procurement laws require contractors to demonstrate responsibility in order to do business with the federal government. A business that avoids or ignores its tax obligations fails that test,” said Senator Collins, whose Committee has jurisdiction over government procurement. “The 27,000 defense contractors who owe approximately $3 billion in uncollected taxes need to be held accountable. “The Pentagon should evaluate whether or not these companies meet the standards under federal law to continue as government contractors,” Senator Collins added. A General Accounting Office report released at the hearing revealed that more than 27,000 Defense Department (DOD) contractors owe back taxes, and the DOD and IRS have not been as diligent as they should be in their efforts to collect those taxes. Under federal law, the government may withhold part of a contractor’s payment to offset for taxes the contractor owes the government. In order to accomplish this, however, federal agencies must report contract payment information to the Financial Management System. The Pentagon has failed to use this tool in far too many cases. In addition, although the IRS knows which contractors owe back taxes, it does not effectively coordinate this information with DOD, so many delinquent contractors continue to receive payments from the government. “At a time of high deficits, it is disturbing that the Pentagon appears to have been negligent in reporting payment data to the Treasury that could have helped the IRS collect taxes owed but not paid,” Senator Collins said. The Defense contractors in question provide a variety of goods and services, such as construction, catering, research, and parts or services related to weapons. The GAO report is available online at http://www.gao.gov/new.items/d0495.pdf .   ###   Printable Version   « previous Press Release next Press Release »   1998 - 1999 - 2000 - 2001 - 2002 - 2003 - 2004 - 2005 - 2006 - 2007 February 2004 Press Releases   February 27 - Senator Collins Reflects on Department of Homeland Security’s First-Year Accomplishments   February 27 - Collins, Lieberman Urge Budget Committee to Fund Key Coast Guard Project   February 26 - Senator Collins Praises Education Dept. for Creating Online List of Accredited Institutions   February 26 - GAO Agrees With Chairman Collins That Comprehensive Postal Reform Is “Urgently Needed”   February 20 - Senators Collins, Lieberman Comment on TSA’s Involvement in Obtaining Sensitive Airline Passenger Information   February 13 - Senators Call on TSA to Explain Its Role in Obtaining Sensitive Airline Passenger Information   February 13 - Senator Collins Comments on DHS Personnel Regulations   February 12 current Press Release   February 12 - Senate, House Committees Release GAO Report On Federal IT Project Management   February 9 - Secretary Ridge Outlines Homeland Security FY ‘05 Budget Before Committee   February 9 - Chairman Collins Joins Senators Fitzgerald and Levin in Introducing Legislation to Reform Mutual Fund Industry   February 6 - Collins Praises Administration's Efforts to Combat Agroterrorism   February 4 - Senator Collins Holds Hearing on Postal Reform   February 4 - Senate Approves Collins, Lieberman Bill to Provide Cutting Edge Counterterrorism Equipment to Communities
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