| Join Our List
|
|
|
|
Dear Sacha,
Did
you get through the tax season mostly unscathed? I certainly hope
so! It's always a stressful time because, if something is
forgotten, no amount of good faith is likely to keep the error from
haunting us. Then there are those who act in bad faith. We
always like to hear stories of such people getting their comeuppance,
to use that delightful British term.
This could be one such story.
|
| Tax Season Roll Call |
|
| Hitting them where it hurts
You've
probably heard of H.R. 4881, which may be more familiar to you as the
Contracting and Tax Accountability Act. The stated purpose of the
act is "to prohibit the awarding of a contract or grant in excess of
the simplified acquisition threshold unless the prospective contractor
or grantee certifies in writing to the agency awarding the contract or
grant that the contractor or grantee has no seriously delinquent tax
debts, and for other purposes."
The act sets the simplified acquisition threshold at $100,000.
The
reasons the act was introduced by Rep. Brad Ellsworth in the House of
Representatives are two-fold. First, to place pressure on
businesses that have been cheating the government out of revenue by not
paying their taxes. Second, to remove any advantage these
businesses may have gained from their delinquency. Senator Barack
Obama, who introduced the same measures in the Senate. He summed
up his feelings by saying, "Our government should ensure that federal
contractors also play by the rules and satisfy the basic responsibility
of paying taxes."
H.R. 4881 is, in short, a bill that seeks to
make it imperative that companies pay their taxes if they hope to do
significant business with the government. Any bidder or
prospective grant winner hoping to obtain a bid or a grant in excess of
$100,000 must "(1) certify that they do not have such a debt; and (2)
authorize the Secretary of the Treasury to disclose information
describing whether such contractors or grantees have such a
debt." The debt in question is a "seriously delinquent tax debt",
which is further defined by the act as being "an outstanding tax debt
for which a notice of lien has been filed in public records."
A
separate change in the tax delinquency rules are being envisioned for
the Federal Acquisition Regulation. While the FAR does make
mention of federal contractors requiring a positive record for
integrity and business ethics, it currently does not have any
provisions mentioning taxes specifically.
That the time for this
bill has become is beyond question. In audits conducted by the
Government Accountability Office between 2004 and 2006 it found
evidence for potentially criminal activities and massive tax
irregularities: approximately $7.5 billion in unpaid federal taxes owed
by federal contractors.
|
|
This
is undoubtedly one of those 'better late than never' moments. For
those of us who are armchair lawyers this bill may come as a bit of a
surprise. We, who contend with the law by a humbler yardstick,
would have thought that "seriously delinquent tax debt" would seriously
impact any company's record for integrity and business ethics.
Now that we have learned better, we can only keep our fingers crossed
and hope that this bill makes the transition to becoming a law.
Sincerely,
Sacha Hartmann
YSER Inc.
|
|
|
