Contractors not only overcharing, they're underpaying taxes

Posted: Thursday, February 19, 2004

We've all heard horror stories about government contractors overcharging. There was the $127 washer that could have been purchased for $10.50. And there was the recent $6.3 million check Halliburton wrote the Army Materiel Command to reimburse it for a suspected overcharge for services provided in Iraq.

Now auditors for the General Accounting Office have noted a disturbing trend of underpaying by some contractors. The GAO found that a total of $3 billion in taxes was owed by more than 27,000 contractors in the budget year that ended Sept. 30, 2002. The agency claims that if the Pentagon had pursued these contractors, it should have been able to collect at least $100 million in 2002.

Most of the contractors involved are small businesses that failed to send the IRS taxes withheld from employee paychecks, the GAO reported. Nonetheless, this is the sort of housekeeping that must be maintained or else fiscal chaos will ensue. With the amount of overcharging some of these contractors have gotten away with in the past, you can see they're expecting to slip under the radar of a government choking on its own bureaucracy. ...

Press and Sun-Bulletin, Binghamton, N.Y.

Feb. 13

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