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Federal agencies over 2018-2019 issued contracts to more than 3,000 entities and grants to nearly 1,000 awardees who were delinquent on their federal taxes, the inspector general’s office at the IRS has reported.
Those contractors received some $10.2 billion in contracts while owing $621.8 million in delinquent taxes, while those grantees received $22.7 billion in grants while owing $269.2 million, it said. “Further, such entities frequently did not self-certify their Federal tax status accurately, as required, prior to receiving contracts or grants,” it said.
It said that 66 of 71 contractors selected in a judgmental sample had certified that they either did not owe or had not yet been notified of delinquent federal taxes when IRS systems indicated that a federal tax debt was present. “American taxpayers expect that entities receiving the benefits of contracts and grants from the federal government should satisfy their own federal tax obligations,” it said.
The report noted that in response to an earlier GAO report citing the same issue, Congress gave the IRS funds to address it by creating a new Federal Contractor Tax Check System to would allow prospective contractors and grantees to request a certificate from the IRS stating that they did or did not owe seriously delinquent taxes. It said that the IRS has designed such a system with an initial go-live planned for late this year.
It said the IRS agreed with its recommendation to continue to prioritize putting the contractor tax check system in place.
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