3,700 Recovery Act Contract And Grant Recipients Owe An Estimated $750 Million

A minimum of 3,700 American Recovery and Reinvestment Act (Recovery Act) contract and grant recipients owed an estimated $750 million in “known unpaid federal taxes” as of Sept. 30, 2009, the Government Accountability Office (GAO) said in a report released on May 24. (GAO-11-485) They received more than $24 billion in Recovery Act funds and represent approximately 5% of the contractors and grant recipients, GAO said. The delinquent parties include prime recipients, subrecipients and vendors. The Recovery Act, which was enacted in February 2009, appropriated $275 billion to be distributed for federal contracts, grants and loans. As of Mar. 25, 2011, $191 billion had been paid out. “Federal law does not prohibit the awarding of contracts or grants to entities because they owe federal taxes and does not permit IRS to disclose taxpayer information, including unpaid federal taxes, to federal agencies unless the taxpayer consents,” GAO said. “The estimated amount of known unpaid federal taxes is likely understated because IRS databases do not include amounts owed by recipients who have not filed tax returns or understated their taxable income and for which IRS has not assessed tax amounts due,” GAO added. The failure to remit payroll taxes is one of the common causes of the tax delinquencies. The report can be found at http://www.gao.gov/new.items/d11485.pdf.