Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

House to repeal law withholding contractors’ taxes

WASHINGTON (AP) Against a backdrop of thousands of government contractors underpaying their taxes by billions of dollars, Congress decided in 2006 to start withholding 3 percent of the contracted price until taxes owed are paid. It never happened.

Five years later, both parties and President Barack Obama want that law repealed in the name of jobs — despite hundreds of millions in taxes still going unpaid by scofflaw government contractors.

The provision signed into law five years ago was part of a tax-cutting bill approved by a Republican-run Congress and signed into law by then-President George W. Bush in 2006. The $11 billion it was to raise over the next decade was supposed to help pay for those tax reductions.

Today’s turnabout comes despite agreement on all sides that problems with scofflaw government contractors continue. Recent evidence includes an April report by investigators finding $750 million in overdue taxes owed by contractors under President Barack Obama’s economic stimulus law, and another from September 2010 citing tax cheats among 20 companies working for the Internal Revenue Service itself.

The law requires federal, state and local governments to withhold 3 percent of their payments to contractors to encourage the full paying of taxes. Its implementation has been delayed twice and it is now scheduled to take effect in January 2013

Please read more here

October 26, 2011 - Posted by | Civilian Contractors, Contractor Oversight, Follow the Money, Government Contractor, Taxes | , , ,

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