Sales Tax Business Tax Sales To Certain Federal Contractors PDF Download

The federal government obligated approximately $507 billion on contracts in fiscal year 2017. Businesses, including federal contractors, pay billions of dollars in taxes each year. Some businesses, however, do not pay owed taxes, contributing to what is known as the tax gap. Federal contractors owe some of the taxes that contribute to the tax gap, and, since 2015, federal law prohibits agencies, under certain circumstances, from using appropriated funds to contract with those who have qualifying tax debt. The IRS also has authority to levy certain payments of contractors with qualifying federal tax debt. GAO was asked to review issues related to federal contractors and tax debt. Among other things, GAO examined whether, in calendar years 2015 and 2016, (1) selected federal agencies had control activities that ensured contractors’ reported federal tax debts were considered before contract award and (2) the IRS levied selected federal contractors’ payments. GAO is making 12 recommendations, including that selected agencies enhance controls for considering contactors’ qualifying federal tax debt before awarding contracts and that the IRS evaluate options to obtain comprehensive contract-payment information.