“ALL CORPORATIONS SHOULD BE EXAMINED”
by Chloe Anagnos, Tax Revolution Institute, ©2016
(Aug. 24, 2016) — According to a new report from the Treasury Inspector General for Tax Administration (TIGTA), the IRS does not effectively screen its contractors for failing to pay federal taxes.
Since 2012, the IRS has been prohibited from awarding contracts to corporations with federal tax debts and has been unable to systematically prevent those hirings from happening.
Currently, the IRS is required to examine the tax records of all bidders for contract solicitations of more than $250,000. In a sample of 73 out of 336 contracts from September 2012 to August 2014, TIGTA found “no evidence that the IRS checked the taxes of the other qualified bidders either.”
In order to have an effective vetting process, the IRS needs to require more financial information and other records from the firms it attempts to hire, according to TIGTA. Also, IRS policies do not give contracting officers the ability to communicate the results of background checks to the affected contractors when the results indicate outstanding federal tax debts.
Moreover, tax-record examinations only took place for contracts larger than $250,000. This means that corporations hired for less than $250,000 were never required to be examined.
However, IRS management has agreed with the recommendations TIGTA made in their report. A database is currently being created that will automatically identify a delinquent tax status that officers can use to help them determine whether or not to award contracts. A notice and consent provision has also been drafted to properly advise contractors that tax examinations will take place prior to the hiring process.
But will this be enough?
It is crucial that the IRS has an effective vetting process to make sure that firms that owe back taxes don’t receive more taxpayer money by awarding them with federal contracts. And regardless of how large or small the contract is, all corporations should be examined when they are being paid with taxpayer money. Just like any other agency or business, the IRS should be held accountable for basics, like thorough record-keeping.
What’s more, the IRS must be held to the same standard of accountability that the agency holds the American people. It is imperative that the IRS follows their own self-imposed rules and regulations in order to avoid negligence. This is yet another reason why a true, independent audit of the IRS is so badly needed.