President Obama Directs Administration to Crack Down on Tax Cheats Seeking Government Contracts

WASHINGTON, DC – Today, President Obama will direct the Office of Management and Budget, together with the Treasury Department and other federal agencies, to take steps to block contractors who are delinquent on their taxes from receiving new government contracts. He will also direct the IRS to conduct a review of the overall accuracy of companies’ claims about tax delinquency to be sure that when a company says it’s paying taxes, it is telling the truth. The President will be joined today by Vice President Biden, Senator Claire McCaskill, Congressman Ed Towns, Congressman Brad Ellsworth, IRS Commissioner Douglas Shulman, and Chief Performance Officer of the United States Jeffrey Zients.

In addition, the President is calling on Congress to give the government the tools necessary to ensure that the public’s tax dollars are not used to boost the profits of companies who refuse to pay their taxes.

“By issuing this directive, all of us in Washington will be required to be more responsible stewards of your tax dollars. All across this country, there are people who meet their obligations each and every day. You do your jobs. You support your families. You pay the taxes you owe – because it’s a fundamental responsibility of citizenship,” said President Barack Obama. “The steps I’m directing today and the steps I’m calling on Congress to take are just basic common-sense. They’re not going to eliminate all of the waste or abuse in government contracting in one fell swoop. Going forward, we’ll also have to do more to hold contractors more accountable not just for paying taxes, but for following other laws as well.”

When President Obama was in the Senate he sponsored legislation to give federal contracting officials the tools that they need to recoup these funds or stop tax scofflaws from getting federal contracts.  The Administration urges Congress to approve legislation to allow the IRS to crack down on corporate tax cheats. Congress also is urged to allow data sharing between the IRS and contracting officials at agencies to ensure that scofflaws do not exploit some loophole to continue to win federal contracts.

Today’s directive builds on steps the President has taken to crack down on government waste – strengthening what works and eliminating what doesn’t:

• In December, the Administration released an update on the President’s efforts to cut high-risk, no-bid contracts, showing federal agencies on track to save $19 billion in contracting reforms this year and $40 billion by the end of 2011.
• In November, the President outlined steps to crack down on wasteful, improper payments which, in 2009, were expected to reach about $100 billion.
• In May, the Administration released the results of the line-by-line review of the Budget and identified more than 120 programs that were wasteful, duplicative, or outdated. Congress approved more than 60 percent of the President’s proposed cuts – significantly higher than recent administrations’ results.

The memorandum the President will sign at today’s event is available HERE.