WASHINGTON – In response to reports that Blackwater USA – the embattled private security firm providing protection for State Department officials in Iraq and Afghanistan – may have relied on information from the Bush Administration to evade payroll taxes, Senator John Kerry (D-Mass.) called on the Small Business Administration (SBA) to explain its potential involvement. 

 
“The Bush Administration can’t hide Blackwater in the shadows anymore- it’s time to bring all of their dealings to light,” said Senator Kerry, Chairman of the Committee on Small Business and Entrepreneurship which oversees the SBA.  “The SBA must explain to the American people what role they may have played in helping Blackwater avoid paying $31.8 million dollars in taxes.  The SBA should not be involved in tax-related decisions.”

 
Kerry requested any documentation the SBA may have provided to Blackwater. In defending their tax filings in a press release, Blackwater pointed to an “official finding” by the Small Business Administration that allowed Blackwater’s workers to be counted as independent contractors rather than employees. 

 
Below is the full text of the letter Senator Kerry sent to SBA Administrator Steven Preston:

 
October 23, 2007
The Honorable Steven C. Preston
Administrator
U.S. Small Business Administration
409 Third Street, S.W.
Washington, DC 20416

 
Dear Administrator Preston:

 
Recently, there have been stories in the press which discuss House Committee on Oversight and Government Reform Chairman Waxman’s concerns that Blackwater LLC has evaded taxes by erroneously classifying workers as independent contractors instead of employees.  Blackwater responded to Chairman Waxman’s inquiry with the following: “The U.S. Small Business Administration has determined in an official finding applying ‘the criteria used by the IRS for Federal income tax purpose,’ that ‘Blackwater security contractors are not employees.’’’

 
I am concerned that Blackwater is relying on a decision of the Small Business Administration for tax purposes.  I am requesting that by November 2, 2007, you send me any determinations that the SBA has made concerning the classification of Blackwater’s workers and any other documents that would lead Blackwater to believe that their workers are not employees for tax purposes.  Also, please clarify whether the Small Business Administration is making or has made employee versus independent contractor determinations for tax purposes. 

 
Thank you for your timely attention to this matter. 

 
Sincerely,

 
John Kerry


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