This entry was submitted by Warren Corbett, Business Research Services Inc. (Bethesda, MD), publishers of Set-Aside Alert. Subscription information can be found at www.setasidealert.com.
Tax scofflaws could be suspended or debarred from federal contracting under a final rule to be issued this month.
Paul Denett, administrator of Federal Procurement Policy, said “tax delinquency” will be grounds for suspension or debarment. He testified Feb. 27 before the Government Management, Organization and Procurement Subcommittee of the House Oversight and Government Reform Committee. Under current regulations contractors are required to report only indictments, convictions or civil court findings. A proposed rule published last year would also require reporting of delinquent taxes or unresolved tax liens over the past three years. (SAA, 4/6/07)
“The [final] rule will add conditions regarding violations of tax laws and delinquent taxes to standards of contractor responsibility, causes for debarment and suspension, and the certifications regarding debarment, suspension, proposed debarment, and other responsibility matters,” Denett said.
He testified in opposition to the Contracting and Tax Accountability Act, H.R. 4881, which would make tax delinquency a ground for debarment. He urged Congress to wait and see how the rule works before enacting legislation. The Government Accountability Office has reported that thousands of contractors owe billions of dollars in overdue taxes. (SAA, 6/24/05)
Denett said the Treasury Department collected $60 million in back taxes from contractors in 2006 by withholding portions of their contract payments. He also urged Congress to repeal legislation that would withhold 3% of payments to contractors starting in 2011, as a way to insure tax compliance. He said any withholding provision should be “more carefully targeted on delinquent contractors.” Industry groups have also called for repeal of the provision.
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