Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

The Ronco Riff

October 25, 2012

Voluntary Today, Involuntary Tomorrow

Another Successful Flush by Wackenhut G4S

Will the last Ronco Consulting Corporation Employee out please close the lid ?

October 25, 2012 Posted by | Afghanistan, ArmorGroup, Bomb Disposal, Civilian Contractors, Contractor Casualties, Contractor Oversight, Demining, ERW, Explosive Ordnance Disposal, Explosive Remnants of War, Follow the Money, Friendly Fire, G4S, Government Contractor, Iraq, Landmines, Lawsuits, Mine Clearance, Ronco, Ronco Consulting Corporation, State Department, Sudan, Taxes, United Nations, United Nations Board of Inquiry, Vetting Employees, Wackenhut | , , , , , , , , , , , , , , | 1 Comment

Pentagon probes contractor’s taxes, treatment of Afghan workers

USA Today June 11, 2012

WASHINGTON – Pentagon criminal investigators have launched a full probe into the military’s top propaganda contractor in Afghanistan regarding taxes paid by its owners and treatment of its Afghan employees, according to a letter obtained by USA TODAY.

The paper revealed in February that the owners of Leonie Industries had owed more than $4 million in back taxes to the federal government. That debt was settled in March, federal records show. The company has received at least $120 million in Pentagon contracts since 2009.

Rep. John Tierney, a Massachusetts Democrat and a senior member of the oversight committee, requested the Pentagon Inspector General investigation of Leonie in March. He praised the Defense Criminal Investigative Service‘s decision to move beyond its initial inquiry and launched a more formal investigation.

Please see the original and read the entire story here

June 11, 2012 Posted by | Afghanistan, Civilian Contractors, Contractor Corruption, Contractor Oversight, Government Contractor, Taxes | , , , , , , , | Leave a comment

Ronco Consulting named in Contractor Lawsuit for EEOC violations

Ronco Consulting was named in the Defense Base Act Class Action Lawsuit against Defense Base Act Insurance Companies and some Overseas Civilian Contractor Companies.

The EEOC granted a former Ronco Consulting Employee and American Injured War Zone Contractor the Right to Sue under the Americans with Disabilities Act after investigating the complaint.

The Americans with Disabilities Act prohibits discrimination against persons with disabilities.

Even those who were disabled due to the negligence of the company in question.

May 22, 2012 Posted by | Civilian Contractors, Contractor Casualties, Defense Base Act, Government Contractor, Ronco, Ronco Consulting Corporation, Taxes | , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Two senators target government contractors with back taxes

USA Today  March 8, 2012

WASHINGTON – The Pentagon should garnish payments made to defense contractors who fail to pay their federal income taxes, say a bipartisan pair of senators in a letter sent to Defense Secretary Leon Panetta.

Sens. Tom Carper, D-Del., and Tom Coburn, R-Okla., cited a Feb. 29 USA TODAY report about the growth in Pentagon spending on information operations or propaganda programs.

The article detailed how two owners of Leonie Industries, the Pentagon’s largest such contractor in Afghanistan, owe more than $4 million in unpaid federal taxes since 2006.

Unfortunately, the apparent lack of effective contractor oversight and accountability led to a situation where the Army awarded at least one of these contracts — valued at $20 million — to a company for ‘marketing and media services’ even after the federal government placed a federal tax lien on the company’s two owners for nearly $4.5 million in delinquent federal taxes,” Carper and Coburn wrote in the letter sent Tuesday evening.

Carper is the chairman of the Senate’s Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security, and Coburn is a member of the subcommittee.

“As you know, when U.S. military personnel have delinquent debts, the Department of Defense can be ordered to garnish their wages until these debts have been settled,” Carper and Coburn write. “If our wartime contractors — or any of the Department’s contractors, for that matter — have accumulated sizable tax debts, then we believe that similar action should be taken against these contractors

Please see the original and read more here

March 8, 2012 Posted by | Civilian Contractors, Contractor Oversight, Department of Defense, Taxes | , , , , , , | 1 Comment

DoD urged to investigate info ops, contractor

Air Force Times  March 2, 2012

Members of Congress called Thursday for the Pentagon to investigate military’s information operations programs and its top contractor in Afghanistan for failing to pay their taxes.

The request from Rep. John Tierney, D-Mass., the ranking member of a panel on oversight of the military, cited a USA Today investigation published Wednesday that showed that the owners of Leonie Industries, the top information operations contractor in Afghanistan, have liens against them for more than $4 million for unpaid federal taxes

“It is deeply concerning to me that the same company whose owners are not meeting their tax obligations has been awarded Army contracts that could surpass $130 million,” Tierney wrote to Lynne Halbrooks, the Pentagon’s acting inspector general. “Families in my district and across the country are playing by the rules and struggling to make ends meet. Any taxpayer funds directed to companies owned by tax evaders is offensive to them and rightly so. As such, I believe an investigation is clearly warranted.”

Please see the original and read more here

March 2, 2012 Posted by | Afghanistan, Civilian Contractors, Contractor Oversight, Taxes | , , , | Leave a comment

IRS Targets US ExPats

Updates to our ExPat Tax Page

For years companies like Blackwater and Ronco Consulting  have Misrepresented their employees as Consultants or Independent Contractors to the IRS to escape having to pay Social Security and Medicare payroll taxes.

Thank you Blackwater and Ronco Consulting

At the same time these same companies represented these same consultants and Independent Contractors to be employees for the purpose of purchasing the mandated Defense Base Act Worker’s Comp Insurance.  Even going so far as to have contractors sign new backdated employment contracts AFTER they were injured.

Fraudulent activity of this nature has garnered the full attention of the IRS to the Contract Employee much more so than it has the Contract Company.  Blackwater even continued to do this after the IRS busted them.

Bob Powers of Power Tax sends us this and asks that we warn all ExPats to be prepared.

Pursuant to an IRS internal memo Memorandum Number: AM2009-0003

This link IRS  has an important note regarding the definition of a foreign tax home (which is necessary to claim the Sec 911 benefit).

The IRS has been using this in somewhat of a distorted way to deny the FEIE to contractors working in Iraq and Afghanistan,, not only those who have families in the U.S., but also single people who left home, joined the military and then were hired as contractors.

If they did not plan in advance and take all the steps necessary to show that their abode was in a foreign country and not in the U.S. they are disallowing the exclusion.

Many have had inexperienced tax preparers or did their own tax return and the case dragged on so long that they lost their administrative appeals rights and facing a substantial tax bill plus penalties cannot afford a good tax attorney to take it to Tax Court.

As a result, the IRS is using their muscle to claim that these workers were living on a base and had no contact with the local community and therefore their “abode-which is not clearly defined anywhere) was in the U.S.

This is the quote from the IRS page:

Tax Home
Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home.
Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes.

If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work.

You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States . However, your abode is not necessarily in the States while you are temporarily in the United States .

Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United
States , whether or not your spouse or dependents use the dwelling.

“Abode” has been variously defined as one’s home, habitation, residence, domicile, or place of dwelling. It does not mean your principal place of business. “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home.”
The location of your abode often will depend on where you maintain your economic,
family, and personal ties.

Example 1.
You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. You return to your family residence in the United States during your off periods. You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. You cannot claim
either of the exclusions or the housing deduction.

Example 2.
For several years, you were a marketing executive with a producer of machine tools in Toledo , Ohio . In November of last year, your employer transferred you to London , England , for a minimum of 18 months to set up a sales operation for Europe . Before you left, you distributed business cards showing your business and home addresses in London .

You kept ownership of your home in Toledo but rented it to another family. You placed your car in storage. In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London .

Shortly after moving, you leased a car and you and your spouse got British driving licenses. Your entire family got library cards for the local public library. You and your spouse opened bank accounts with a London bank and secured consumer credit. You joined a local business league and both you and your spouse became active in the
neighborhood civic association and worked with a local charity.

Your abode is in London for the time you live there. You satisfy the tax home test in the foreign country.

Note that the IRS agents examining these returns are not seasoned international agents and their internal directive is to disallow the exclusion regardless of the taxpayer’s defenses and force it to go to Tax Court.

We recommend you check out Power Taxes pages before you deploy.

U.S. Expatriate Tax & Business Solutions

January 12, 2012 Posted by | Blackwater, Civilian Contractors, Defense Base Act, ExPats, Follow the Money, Legal Jurisdictions, Ronco, Ronco Consulting Corporation, Taxes, Uncategorized, War Hazards Act | , , , , , , , , , , , | 2 Comments

Report shines a light on defense firms’ low tax rates

Pentagon Notebook  The Hill  November 6, 2011

A new report has branded U.S. defense firms with a label that has become a political target, charging that they pay too little in taxes.

American defense manufacturers pay an average annual tax rate of 17.5 percent, placing them in a class with some of the nation’s least-taxed sectors like information technology, telecommunications, financial services and energy, Citizens for Tax Justice and the Institute on Taxation and Economic Policy concluded.

In the joint report, which features data spanning 2008-2010, the groups note the U.S. defense sector “is not exactly an industry, but it is a group that paid notably low tax rates.”

Many defense firms paid less than the mandated 35 percent corporate tax rate, the report found.

“Not only was the 2008-10 effective tax rate on the top 10 defense contractors less than half of the 35 percent official corporate tax rate,” the report states, “but the effective rate fell steadily from 2008 to 2010, from an already paltry 19.3 percent in 2008 to a tiny 10.6 percent by 2010.”

The report comes at a time when Democrats are criticizing some firms for paying low taxes despite raking in big profits, as unemployment remains high and the economy continues to sputter

Please read the entire article here

November 6, 2011 Posted by | Civilian Contractors, Contractor Oversight, Department of Defense, Government Contractor, Taxes | , , , | Leave a comment

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 | , , , | Leave a comment

Statement Concerning Filing of Amended Class Action Tax Misclassification Against Xe Services (formerly Blackwater) on Behalf of Personal Security Specialists for Loss of Benefits and Withholding, Expenses, Penalties, and Treble Damages

Washington DC September 21, 2011

Scott Bloch files Amended Complaint against  Blackwater on behalf of thousands of former employees for unlawful, fraudulent and unconscionable treatment of employees in fraudulent misclassification as independent contractors

Since 2007, Blackwater Industries, which has changed its name to Xe Services, has employed over 10,000 personal security specialists to perform operations in Iraq and Afghanistan under lucrative contracts with departments of the United States Government including the State Department and CIA. While employing these individuals, many of whom are decorated veterans of the armed services including Special Forces, Army Rangers, Navy Seals, Blackwater sought to avoid millions of dollars in taxes, withholding, and payments of benefits to these employees by classifying them improperly as independent contractors.

Yesterday, Scott Bloch filed an amended complaint in the class action lawsuit on behalf of four former security specialists, who were injured while working for Blackwater, in order to recover their payment of social security, unemployment insurance, and unpaid benefits and state and local withholding and unemployment insurance, and other unspecified damages. The action is brought on their own behalf and thousands of others who have worked for Blackwater and its newly named Xe Services. The action seeks $240,000,000 in damages for lost benefits, overtime, treble damages and punitive damages, as well as additional amounts as proved for the class of specialists.

The suit also states that one of the representative plaintiffs already had a determination from the IRS that Blackwater misclassified him as an independent contractor. “The IRS already determined in the case of one of my clients that he should have been classified as an employee,“ said Bloch. “Now thousands of people will have to file amended returns. Thousands of people will likely be entitled to benefits they were denied due to the misclassification, including payment of their employer share of pension, health and disability insurance premiums, and other plans that Blackwater filed with the government for its employees, promising it would not discriminate against those employees as they did here.”

“Blackwater made hundreds of millions of dollars from taxpayers and hired thousands of former veterans of military service and police officers. They also had in their ranks Federal Agents, such as current employees of the FBI on leave of absence. They were hired as security specialists in Iraq and Afghanistan,” said Bloch. “It is a grave injustice to them who were mistreated and left without any health insurance or other benefits for their families, and left to fend for themselves in paying into Social Security and Medicare. They laid down their lives to protect dignitaries and carry out duties in support of wars for America, and they deserve better than this. Many of these same men risked their lives to protect everyone from the President of the United States to U.S. Senators, Congressman, U.S. Diplomats, to Foreign Presidential & Diplomatic Figures in one of the most dangerous places on the planet.”

One of the Plaintiffs guarded such dignitaries as the just assassinated Former Afghan President Burhanuddin Rabbani as well as current Secretary of State and then Senator Hillary Clinton.

“Blackwater acted illegally and unconscionably toward these brave individuals,” said Bloch. ”Through their fraud as pointed out in the Amended Complaint, they avoided overtime for security workers who worked sometimes 12-16 hours a day 6 days a week. They were forced to sign agreements they never read and were not given time to read and not given copies, which took away valuable rights and were unlawful in their terms.”

Read full PRESS RELEASE Amended Complaint against Xe Blackwater here.

Contact Scott J. Bloch, PA:

Scott Bloch, 202-496-1290

September 21, 2011 Posted by | Blackwater, Civilian Contractors, Contractor Oversight, Defense Base Act, Follow the Money, Government Contractor, Legal Jurisdictions, Politics, Private Military Contractors, Private Security Contractor, Ronco, Ronco Consulting Corporation, State Department, Taxes, Wartime Contracting | , , , , , , , , | Leave a comment

Contractor Companies Misclassifying Employees for Tax and Defense Base Act Insurance Purposes

Some Contract Companies avoid paying Medicare and Social Security Taxes on their employees by classifying them as independent contractors or consultants.  The IRS considers this to be Fraud.

These same companies claim these same independent contractors/consultants to be employee’s for the purposes of acquiring the mandated Defense Base Act Worker’s Compensation Insurance.  Even going so far as to have workers sign and back date employment contracts after they have been injured so they will be covered.

See more on Misclassification of Employee’s as Contractors at Overseas Contractors Tax Information where you will also find a link to the IRS Form SS-8 that you will need to fill out if you have been misclassified.

Following is a recent SS-8 Determination which confirms the Misclassification and opens up the company to an investigation of Tax and Insurance Fraud and US Labor Law Violations.


February 24, 2011 Posted by | Blackwater, Civilian Contractors, Contractor Oversight, Defense Base Act, Follow the Money, Government Contractor, Private Military Contractors, Private Security Contractor, Taxes | , , , , , , | Leave a comment

Court: Blackwater Contractor in Iraq Cannot Exclude Compensation Under § 112

From Tax Professor Blog

The Tax Court yesterday held that a Florida man who earned $98,400 in 2005 working for Blackwater (since renamed Xe) providing security services to the U.S. Army in Iraq could not exclude the compensation from income under § 112 as “combat zone compensation of members of the Armed Forces.

Holmes v. Commissioner, T.C. Memo. 2011-26 (Jan. 31, 2011).

The Tax Court concluded that the taxpayer did not serve in the Armed Forces of the United States but instead was a private citizen hired by and paid by a private company (Blackwater). The Tax Court refused to impose a penalty because the taxpayer relied on an IRS memorandum wrongly stating that civilian personnel in direct support of combat zone military operations qualified for the § 112 exclusion. (Hat Tip: Bob Kamman.)

Please see the original here

February 1, 2011 Posted by | Blackwater, Civilian Contractors, Private Military Contractors, Private Security Contractor, Taxes | , , , , | Leave a comment