Stimulus Money Recipients Owe Billions in US Taxes-GAO

Tuesday, 24 May 2011 04:55 PM

 

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Contractors and businesses that received money through the 2009 federal economic stimulus plan owe billions in unpaid taxes to the U.S. government, a federal auditor said Tuesday.

The Government Accountability Office said that as of Sept. 30, 2010, the total bill for unpaid taxes, including interest and penalties, was $330 billion.

By law the federal government can make grants to entities that owe taxes, so some of the outstanding bills were racked up before the stimulus plan was passed.

"We've known for some time that there's a significant tax gap in this country, and in some cases we've found that government contractors are contributing to the problem," said Senator Tom Carper, a Democrat from Delaware, in a statement.

He added that "those who fail to pay their fair share... force their fellow Americans who play by the rules to pay more in taxes."

Last month, the office reported that as of Sept. 30, 2009, 3,700 contract and grant recipients owed $750 million in unpaid taxes. That represented nearly 5 percent of the 80,000 funding recipients.

The $819 billion stimulus plan, a combination of spending and tax measures intended to jolt the U.S. economy out of the longest and deepest downturn since World War Two, appropriated $275 billion for grants, contracts and loans. As of March 25, about $191 billion had been paid out, the GAO said.

Because of the way the Internal Revenue Service tracks taxes owed and paid, the estimate of unpaid taxes is likely too low, it said.

The GAO said it had uncovered 15 cases in which recipients had not sent withheld payroll taxes to the Internal Revenue Service, a violation that totaled $40 million.

In one example, a nonprofit organization did not give the IRS payroll taxes from the middle to late 2000s and defaulted on agreements to pay the money in installments. Finally, the IRS filed tax liens against the organization to collect the more than $2 million it owed.

The group received awards from the stimulus plan of more than $1 million for social services, the GAO said.

Of the plan's many moving parts, which included fund transfers to states and aid for the unemployed, contracts and grants were targeted mostly at direct job creation.

According to the federal government's web site, www.recovery.gov, from January through March, recipients reported that they had created 571,383 jobs through contracts, grants and loans. The website showed almost $265 billion had been awarded. (Reporting by Lisa Lambert; Editing by Dan Grebler)

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