Houston Democrats

According to the General Accounting Office, 33,000 federal non-defense contractors who work for civilian government agencies are behind on their payroll taxes to the tune of $3,000,000,000.

Maybe that is why the administration would rather not read the news and stay high on Rose Garden optimism.

You know, at first I was going to say that I was amazed about the following revelations, but with our current administration, one learns to expect just about anything.

Revelation Number 1:

In one case, the owner of a firm that provides security guards to the Department of Homeland Security transferred payroll taxes withheld from workers' paychecks to a foreign bank account instead of the government and used the money to build a house overseas.

Revelation Number 2:

The owner of another company, one that supplies health care services to the Department of Veterans Affairs and the Department of Health and Human Services, piled up more than $18 million in unpaid payroll taxes while buying multimillion-dollar properties and luxury vehicles.

Revelation Number 3:

And one contractor that furnishes temporary workers to the Department of Housing and Urban Development has owed back taxes for nearly two decades, simply closing businesses and starting new ones when the bills get too high.

So did these guys still get paid? Sure they did. They are "honorably serving our nation in a time of war" right?

In all, 50 cases closely examined by auditors with the Government Accountability Office involved "abusive and potentially criminal activity." Even so, the contractors still got paid.

The Senate Governmental Affairs' permanent subcommittee on investigations will focus on these revelations today. Senator Norm Coleman (R-MN) said:

Under these circumstances, we must bar certain companies and individuals from receiving federal contracts. When individuals or companies demonstrate flagrant disregard for the tax system through a pattern of repeated and continuing abuse, it is appropriate to publish their names and bar their receipt of federal contracts.

You wonder why something wasn't done about these non-defense contractors before now. According to the IRS, confidentiality rules prohibit the disclosure of tax informaiton, including to the very governmental officials that oversee contracts. I just have to ask why? It seems so logical to check who is being responsible and who isn't, and to give the contract to the organization that has a good track record. Right, money talks in Washington. Let's see if the administration and Congress pay attention to the GAO's advice. We are all aware of how often good advice is ignored these days.

The GAO is recommending changes at the Treasury Department's Financial Management Service, the department responsible for collecting delinquent taxes from contractors before they get paid. Commissioner of the FMS says that there is a need for some change, but that his department "has a track record that clearly demonstrates" it can do the job.

I sure hope so because this next bit of news doesn't give me a whole lot of confidence:

The report follows a similar one from February 2004 that found that 27,000 Pentagon contractors -- about 10 percent of the total -- owed $3 billion in back taxes. At the time, GAO investigators said, neither the Defense Department nor the IRS had done much to collect the money.

There is some "good" news though. The government is set to save $17 million in money withheld from Pentagon contractors that are behind on their taxes. I guess it's nice that the government is saving money, but it sounds like corruption is rampant in this sector of our economy.

IRS Commissioner Mark W. Everson said the agency is making progress on collecting back taxes, but says there is still "a long way to go."

That might be just a bit of an understatement.

The new Forensic Audits and Special Investigations Unit at the GAO put together the report. The team is composed of veteran federal investigators and high-tech data-mining tools. The Unit discovered who was behind on tax payments by matching an IRS database of unpaid taxes with another of contractor payments. The managing director of the Unit said:

The findings are an example of the kinds of work that we expect to replicate in the future across the government.

Let's hope so. With the way the nation is running up deficits and debt, there isn't room for letting contractors off the hook for billions of dollars. Although, if we had put the money we have spent in Iraq towards paying off the national debt, maybe the dollar might be worth more than it is. If you have been on a trip out of the country, you know exactly what I mean. However, even those of us who don't get to travel abroad much will be feeling the pinch at the stores, where a large portion of their products are imported.

I just have to say this: So why was it so important for Congress to make it easier for credit card companies to collect on working Americans? I think it would make much more sense to focus on the big fish who are delinquent on taxes than increasing the burden on the little ones.

Read the article, "Thousands of Non-Defense Contractors Owe Taxes" from the Washington Post.