Internal Revenue Service officials broke their own rules by handing out dozens of contracts worth more than $18 million to companies with federal tax debt.
One company with a felony conviction even managed to secure nearly $70,000 worth of contracts from the tax agency, according to its inspector general.
The watchdog’s review found 17 corporations, each of which had racked up thousands of dollars in tax debts, won 57 contracts from the IRS between 2012 and 2013 in violation of a 2012 law against the practice.
Leslie Paige, vice president for policy at Citizens Against Government Waste, said the estimates of waste in the inspector general report are actually “conservative” given the parameters that limited the review.
She noted a major cause of the abuse lies in the fact that contractors are permitted to “self-certify” whether they have tax debts or felony convictions with little expectation that the IRS will verify their statements.
“The latest [inspector general] report builds upon its previous work on this issue, a report in 2013, which the IRS simply ignored, and demonstrates how little progress the agency has made to keep tax cheats and felons from becoming federal contractors,” Paige said.
The 2013 report discovered 7 percent of the agency’s vendors had accumulated $589 million worth of tax debt. But the problem went uncorrected.
“The IRS’s response to this latest report was to say, essentially, ‘um, yeah, we’ll get right on it … maybe tomorrow,'” Paige said.
She noted the expansion of the tax agency’s purview under the Affordable Care Act.
“These sort of lapses only serve to deepen the agency’s credibility problems with the taxpayers, who don’t get off so easy when the IRS comes after them for tax violations,” Paige said. “And the [inspector general] report offers only a glimpse of a much bigger problem, rampant all over the government: The contract procurement system is broken and bad actors continue to be able to obtain federal contracts with impunity.”
