60,000 firms owe $8B in taxes

Federal contractors owe billions of dollars in unpaid taxes, a persistent problem that Congress is now moving to address.

Lack of communication between agencies lets one arm of the government pay contractors money while another arm is trying to collect taxes from them, government watchdogs say. "This is the kind of stuff that makes people mad and for good reason," says Rep. Brad Ellsworth, D-Ind., who is leading the fight to limit contracts awarded to tax delinquents.

The Government Accountability Office estimates that more than 60,000 federal contractors owe $7.7billion in back taxes. An additional $1 billion is owed by health care providers who receive Medicare funds, the GAO says. An undetermined amount of farm subsidies, small-business loans and other benefits flow to companies that owe taxes. These taxes are part of about $300 billion in taxes that go unpaid every year, the Internal Revenue Service estimates. ...