Treasury Inspector General for Tax Administration
June 24, 2015
TIGTA - 2015-18
Contact: David Barnes
WASHINGTON— Despite a statutory prohibition from doing business with corporations that owe back taxes, the Internal Revenue Service (IRS) awarded $18.8 million in contracts to 17 corporations with Federal tax debt during Fiscal Years 2012 and 2013.
That is the finding of a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
Beginning with Fiscal Year (FY) 2012, Federal law has prohibited the IRS from using appropriated funds to enter into a contract with a corporation that has certain Federal tax debt and/or felony convictions, unless the Department of the Treasury Suspension and Debarment official has considered suspending or debarring the corporation.
TIGTA reviewed whether the IRS had well-designed and effective management controls in place over the use of FYs 2012 and 2013 appropriated funds to implement the requirements of the Federal law that prohibited the award of contracts to corporations with certain Federal tax liabilities. The Consolidated Appropriations Act of 2012 also prohibited the IRS from using appropriated funds to enter into a contract with any corporation that was convicted or had an officer or agent of such corporation acting on behalf of the corporation convicted of a felony criminal violation under any Federal law within the preceding 24 months.
TIGTA found that the IRS did not have effective controls in place to prevent the award of contracts to corporations with certain Federal tax debt and/or felony convictions. TIGTA identified 17 corporations that were awarded a total of 57 contracts valued at about $18.8 million during FYs 2012 and 2013, while the corporations had Federal tax debt.
In addition, TIGTA found that the IRS did not follow the Department of the Treasury requirement to insert specific language in solicitations requiring corporations to assert whether or not they have certain Federal tax debt and/or felony convictions. Based on a statistical sample of contracts awarded in FYs 2012 and 2013, TIGTA found that the IRS did not require corporations to self-certify prior to contract award, as required, for any of the 143 sample cases.
Read the report.
Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws.
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