US government officials revealed last week that the Department of Defence is powerless to prevent contracts from being awarded to tax delinquent firms, due to the existence of strict privacy laws.
The fact has come to light following the release of a General Accounting Office report, in which investigators found that some 27,000 defence contractors owed the IRS a total of $3 billion in unpaid taxes.
However, the GAO report also spotlights a failure on the part of government agencies to withhold 15% of a firm’s payments if they are found to owe taxes, a rule laid down by legislation enacted in 1997. If properly applied, the government could have recouped up to $100 million from the guilty firms, stated the report. However, it was found that a mere $687,000 has been withheld since 1997.
In addition, the report suggested that the IRS has shown insufficient aggression towards contractors with unpaid taxes, although it acknowledged that tight budgetary constraints may have limited the agency’s room for manoeuvre on the issue.
Whilst the privacy laws also prevent the GAO from naming the companies in question, it is understood that the majority are small firms, which failed to pass on to the IRS federal income, social security and Medicare taxes.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment