Contractors will be required to disclose tax debt

Frederick J. Frommer

Associated Press

WASHINGTON (AP) — A new federal rule will require government contractors to disclose whether they owe federal taxes or have violated federal criminal tax laws following congressional investigations that found companies owing millions of dollars were still getting government contracts.

The rule published this week is in response to a request by the Senate Permanent Subcommittee on Investigations in 2006.

Back then, the Government Accountability Office determined that one in 10 companies contracting with the General Services Administration owed unpaid federal taxes, totaling $1.4 billion.

That investigation found that despite owing between $100,000 and more than $9 million to the government, the owners and officers of some companies had substantial personal assets, including homes worth more than $1 million and luxury vehicles.

Previous GAO investigations found that Pentagon contractors owed $3 billion in taxes and non-defense contractors owed $3.3 billion.

"This rule places a guard at the front gate, forcing tax-cheats to think twice before seeking a federal contract," said Minnesota Sen. Norm Coleman, who chaired the subcommittee in 2006 and is now the panel's top Republican. He added that the new rule will "effectively weed out tax-delinquent contractors."