Citing control weaknesses, the report said FMS was not aware
of $40 billion in contractor payments that were not
submitted for potential levy, nor did FMS identify payment
files lacking contractor taxpayer identification numbers,
names, or both, something that resulted in an additional
$21 billion that could not be levied.
“FMS also excluded billions of dollars from levy because
of what it considered limitations in its automated systems
without taking steps to overcome those limitations,” said
GAO, adding another $10 billion in purchase card payments
that could not be levied.
GAO looked at 50 of these contractors “with abusive and
potentially criminal activity,” to identify, for example,
failures to forward payroll taxes withheld from employees
to the IRS – a felony under U.S. law.
It said some individuals working for the Departments of
Justice and Homeland Security, and the National Aeronautics
and Space Administration owned several businesses with
unpaid federal taxes that were diverted for personal gain
in some cases, or toward reinvestment.
The report concluded FMS missed out on hundreds of millions
in fiscal 2004 by failing to include debts owed and payments
made for the 33,000 contractors in the FPLP.