Significant improvments are needed in the contractor tax check process
Monday, August 22nd, 2016 @ 5:23PM
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
Office of Audit
SIGNIFICANT IMPROVEMENTS ARE NEEDED IN THE CONTRACTOR TAX CHECK PROCESS
Final Report issued on July 20, 2016
CFEG reports that TIGTA issued a report on July 20, 2016 finding that the IRS needs to make significant improvements in checking to see that IRS contracts are not awarded to corporations with unpaid Federal tax liabilities.
TIGTA reported that since Fiscal Year 2012, annual appropriation acts have prohibited, with limited exceptions, the IRS from making contract awards to corporations with unpaid Federal tax liabilities. TIGTA has reported previously that the IRS does not effectively screen its contractors for delinquent Federal taxes. As a result, the IRS has been unable to systematically prevent contractors that have not met their Federal tax responsibilities from receiving Federal contract dollars.
TIGTA did this audit to determine whether IRS contracting officers are completing the required tax checks to ensure that contractors with serious delinquencies do not receive taxpayer funds through contracts with
TIGTA found that the IRS tax check process was not effective in identifying tax delinquent contractors. As a result, the IRS remains at risk of awarding contracts to entities that are not in compliance with tax law. Current IRS policy requires a tax check for all bidders in the competitive range of solicitations greater than $250,000. TIGTA reviewed a statistical sample of 73 contract awards from a population of 336 contracts of $250,000 or more awarded during the period September 2012 through August 2014, and found that 21 (29 percent) of the 73 contract awards reviewed did not have evidence that the contracting officer performed the required tax check on the winning bidders. In all 73 contracts (100 percent), there was no evidence that the other qualified bidders underwent a tax check, as required.