If you owe (back taxes), you can't play (in the government contractor game)

A bill was introduced in the House on April 17 that would, among other things, prohibit awarding of federal contracts to contractors who owe federal income taxes (reported in the April 19, 2007 6pm BNA Daily Tax RealTime).  That's one step beyond the recently released proposed rule, published in the March 30 Federal Register, requiring federal contractors to report if they are delinquent in paying federal taxes. GAO studies show that there are thousands of federal contractors with unpaid federal taxes aggregating about $7 billion. See this April 2, 2007 report on GovExec.com by Jenny Mandel covering both the proposed rules and GAO studies. 

According to testimony at today's hearing at the House Oversight and Government Reform Subcommittee on Government Management, Organization, and Procurement , more detailed investigations into 122 of those delinquent contractors has indicated "'abusive and potentially criminal' behavior" (reported in the April 19, 2007 6pm BNA Daily Tax RealTime, quoting  Forensic Audits and Special Investigations Managing Director Gregory Kutz).

We may not be able to completely eliminate the so-called 'tax gap', but we surely should be able to ensure that federal contractors do not continue to feed at the federal taxpayer trough while reneging on their own responsibilities to pay federal income tax.  This is a good move and one that should lead to enacted legislation, sooner rather than later.