Companies that got stimulus money owe millions in back taxes

By: Sharyl Attkisson
Topics: Economy ,; Congress

(Credit: iStockphoto)

Updated 4 p.m. ET

A new investigation by the Government Accountability Office finds taxpayers are getting ripped off to the tune of hundreds of millions of dollars by companies that received tens of billions of stimulus funds.

At least 3,700 contract and grant recipients of the government's 2009 effort to stimulate the economy owe more than $750 million in unpaid federal taxes.

Sen. Charles Grassley (R-Iowa) wants to block those companies from receiving new grants or contracts.

"There's no reason for the government to deal with companies that don't" pay taxes, said Grassley, who requested the report.

"A government contract is something to be earned, not something to be taken for granted," he said.

No names are given in the report, but the Senate Permanent Subcommittee on Investigations is holding a hearing on Tuesday to question Daniel Gordon, the official in charge of federal contracts at the White House Office of Management and Budget.

Read the GAO report

The companies in question received a total of $24 billion dollars in stimulus money, according to the GAO. Investigators say the actual amount of unpaid federal taxes is probably higher than the stated $750 million, because IRS databases don't include recipients who haven't bothered to file tax returns or understated their taxable income.

Among 80,000 contractors and grant recipients that GAO reviewed, investigators selected 15 recipients for further investigation and found "abusive or potentially criminal activity." Among the case studies, the amount of unpaid taxes in that group ranges from $400,000 to over $9 million. The IRS has now taken enforcement action against the selected recipients in an attempt to collect the tax dollars due.

Contractors that want business or money from the federal government must first certify that they have no tax liability. Lying about it is a serious criminal violation. However, at today's hearing, officials told senators about a maddening loophole: under privacy laws, federal contracting officers can't get information from the IRS on a grantee's tax status to find the truth. Sen. Tom Coburn (R-Okla.) said that must be fixed.

The Obama administration has said that cracking down on waste, fraud and abuse of tax dollars is a priority. The administration is said to have rules in place to address the problem, but Grassley says it's not clear how the rules are being used, and that improvements may be needed.

Sharyl Attkisson
Sharyl Attkisson is a CBS News investigative correspondent based in Washington. All of her stories, videos and blogs are available here.
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by justme2012 May 24, 2011 4:54 PM EDT

I thought Joe was overseeing this.

Did he fall asleep again?

Reply to this comment


by RickChicago1 May 24, 2011 10:30 PM EDT: No Joe did EXACTLY what Obama told him to do. Make sure we only spend this on Dem districts and on companies that donate big time to Dem policies. Once again we see how corrupt the Left is. Obama gave the Stimulus/Porkulus money OVERWHELMINGLY to Dem areas of the country. Look at what he did in Wisconsin. Over 70% of the stimulus money went to Public Sector unions. We see Obama for what he is. A FAR LEFT union thug who wishes to bend EVERY rule and tell ANY lie to achieve his radical ends.

So Taxpayer money was basically a money laundering scheme for the Dems and their union thugs. Dem Politicians have always given money to the Union thugs. The union thugs then donate heavily to Dem politians. While they are both getting fat the taxpayer is paying the bill.....

Paying for the unsustainable union thug pay rates and benefit packages that exist NOWHERE else in the world.

Paying for the Politicians who are the beneficiaries of the bribes/donations.

Paying for the incompetence of Dem leadership.

Had enough yet??

Is it 2012 yet??


by justme2012 May 25, 2011 8:38 AM EDT: Rick,

Actually I think Obama's team got this done as Biden slept. I really don't think Biden is smart enough to accomplish anything of this magnitude.

by discussthis May 24, 2011 4:36 PM EDT

0bummer:
"Yes, we let these tax-challenged contractors take the stimulus money, so they could pay their back taxes. Now we can count the taxpayers' own money as new revenue for the government. And in so doing we lowered the deficit. And we only took about 15% off the top before distributing 'stimulus' funds and secretly gave it to unions. Perfect."

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by discussthis May 24, 2011 4:50 PM EDT: "But don't worry, taxpayers. We will get that 15% back as campaign donations, and use it to create marketing and advertising jobs. See how we use these funds to create revenue and jobs? Vote Hope and Change."


by catmomtx May 24, 2011 6:44 PM EDT: And of course we know this never happened under Republican Presidents, right? You people always act as if any type of corruption that happens in our country under this administration has never, ever happened before and it is all because the President wants to screw the country, right?

by Martha12345 May 24, 2011 3:55 PM EDT

And we should trust the government to handle our health care ? I think not !!! What a bunch of clowns.

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by catmomtx May 24, 2011 6:54 PM EDT: Why not, you've been trusting for profit insurance companies. I bet you haven't checked on what their profits have been lately, have you? Yup, after Republicans kill the Affordable Health Care Act, granny and your kids future, I hope you will be happy. Notice, they want to kill health care reform and give vouchers to the old and disabled to purchase health care from FOR PROFIT insurance companies and you don't see anything wrong with that?


by justme2012 May 24, 2011 10:35 PM EDT: "2010 - the health insurance industry ranked #86 by profit margin out of 215 industries, at 3.3%."

Yep, they are making a killing a whopping 3.3%.

Greedy companies. They should be operating at a loss like our government.


by rightbehind May 24, 2011 3:32 PM EDT: One of the local contractors appears to have made a mockery of the stimulus funds and basically created a shift in local traffic for about a mile with absolutely no construction or repair going on. At one end is the big sign saying it's part of the reinvestment act. I live in a highly conservative area and the local government is almost 100% republican controlled. It's nothing short of shameful.; Reply to this comment


by libclubber May 24, 2011 3:20 PM EDT: what a bunch of corrupt politicians. Whatta ya expect from the donkey punch party!; Reply to this comment


by jgg000101 May 24, 2011 2:51 PM EDT: wait'll Sherriff Joe finds out about this, boy is he gonna be pist.
Joe knows where every stimulus dollar went, and nobody messes with sherriff joe.; Reply to this comment


by noloyalisti May 24, 2011 1:58 PM EDT: Well, why do you think we call them bankster houses and other greedy, filthy rich corporations that are bad for America? Why do they think everyone knows them as the criminal syndicates they are?; Reply to this comment