Companies that owe back taxes win contracts

The unpaid taxes include corporate income, personal income and payroll.
WASHINGTON (AP) -- Government contractors who owe millions of dollars in back taxes bought luxury cars, boats and multimillion-dollar properties. Some failed to pay taxes but gambled company money.
It could be "a new reality TV show, lifestyles of rich and famous tax deadbeats," said Sen. Norm Coleman, R-Minn.
One in 10 companies contracting with the General Services Administration from October 2003 through June 2005 owed back taxes, Coleman's panel, the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, learned Tuesday. Their debts total $1.4 billion.
Insult to injury
"In an age of increasingly tight fiscal discipline, that $1.4 billion could be put towards our homeland security, our children's education or job-training programs," Coleman said. "It adds insult to injury that these tax deadbeats are actually paid enormous amounts of money every year from American tax coffers."
Three hearings have shown government contractors owing $7.7 billion in taxes. The studies, conducted by the Government Accountability Office, showed Pentagon contractors owed $3 billion in taxes and nondefense contractors owed $3.3 billion.
The unpaid taxes include corporate income, personal income, payroll, excise and other taxes. Willfully failing to transfer payroll taxes withheld from employee paychecks to the federal government is a felony offense.
Worst offenders
Among the worst offenders with General Service Administration contracts, an emergency supplies provider got $100,000 in contract payments while owing more than $700,000 in taxes. The company made large loans to a company officer, and the owner had a million-dollar home and a luxury vehicle. The company had a federal tax lien when it won the contract.
A security services company got at least $1 million in payments while owing more than $2 million in taxes. The company negotiated an agreement to pay its back taxes, but it frequently pays late. A bank closed the company's checking account for suspected check kiting. The owner has a million-dollar lakeside home.
A public communications company got $100,000 in payments while owing more than $2 million in mostly payroll taxes. The company owner owns residential properties worth about $1 million and made about $500,000 in cash withdrawals at casinos.
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