Records reviewed by congressional investigators showed that more than 27,000 defense contractors owe a total of $3 billion in unpaid taxes. The investigators selected 34 businesses and 13 individuals for further audit and investigation.
Among those contractors studied in detail, investigators found:A contractor who sells and installs office furniture at military installations was paid $38,000 by the Pentagon while owing over $150,000 in taxes. The owners used the business to pay personal expenses, such as a home mortgage and credit cards. One owner is a retired military officer.A researcher was awarded an $800,000 contract in 2002 while over $700,000 behind in tax payments. The owner has more than $1 million in loans for cars, real estate and recreational activities and owns a high-performance airplane.A business that provides janitorial services at military installations received contracts totaling nearly $12 million from 1998 through 2001. The business owed over $800,000 in taxes and is linked to potential check fraud.A construction service company that maintains and repairs housing on military bases was paid $2.4 million in 2002 while owing over $1 million in taxes. The business also owes the Defense Department tens of thousands of dollars because of an overpayment in early 2000.An information technology company that provides personnel support has multiple Defense Department contracts valued up to $13 million while owing nearly $1 million in taxes. It received payments from three other federal agencies and may be involved in money laundering activities.An individual who provides musicians for religious services has not filed an income tax return since 1997. The Pentagon paid the individual $217,000 in 2002.