Tax Tidbits
Happy Tax Day!
Well, not quite. The filing deadline this year was moved to Monday, April 18 because today marks the observance of Emancipation Day. Enjoy your weekend, procrastinating taxpayers.
Here’s some food for thought as you get ready to dive into those returns:
- In 2007, the Government Accountability Office (GAO) estimated that tens of thousands of federal contractors owed more than $7 billion in federal taxes.
- The Treasury Inspector General for Tax Administration (TIGTA) found that the Internal Revenue Service (IRS) awarded contracts to at least 20 companies with more than $5 million in delinquent federal taxes. A later report determined that 11 IRS contractors owing $4.3 million in taxes received more than $356 million in payments from the IRS and an additional $3.7 billion from other federal agencies
- Tax violations comprise only 0.5 percent of the instances in our Federal Contractor Misconduct Database (FCMD) but account for almost 10 percent of the penalty total, most of which is GlaxoSmithKline’s record-breaking $3.4 billion settlement with the IRS in 2006.
- General Electric, which made news recently for having paid no federal taxes last year despite earning $5.1 billion in U.S. profits, received $3.1 billion in federal contracts last year. GE has 37 misconduct instances in our FCMD, accounting for $116 million in fines, settlements, and penalties. None of those instances involve tax violations, further confirming the oft-repeated claim that GE’s tax department is “the world’s best tax law firm.”
- In 2008, GAO found that 1.6 million businesses owed $58 billion in unpaid federal payroll taxes, including penalties and interest. FedEx has 10 resolved or pending instances in the FCMD involving allegations that the company misclassified workers as independent contractors and underpaid payroll taxes.
Last but not least, some good news:
- Last week, it was reported that the IRS settled the first case brought under an IRS whistleblower program created in 2006. The unidentified whistleblower, a Pennsylvania accountant, will receive $4.5 million (less a million or so for taxes, of course) for tipping off the IRS that his employer, an unidentified financial services firm, owed $20 million in taxes and interest.
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Neil Gordon
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