Watchdog: IRS at risk of giving contracts to firms with tax debts

The Internal Revenue Service is still at risk of giving contracts to corporations with unpaid tax liabilities, a watchdog said in a report made public Wednesday.

The Treasury Inspector General for Tax Administration (TIGTA) found that the agency needed to make significant improvements to the process of checking to see if contract bidders have tax debts.

Appropriations laws in the last several years have generally banned the IRS from awarding contracts to businesses with unpaid taxes. TIGTA has previously reported that the IRS had given $18.8 million in contracts to firms with tax debts in fiscal 2012 and 2013.

For its latest report, TIGTA examined 73 contract awards of $250,000 or more from September 2012 through August 2014. The watchdog found that in 29 percent of the cases, there was no evidence that a tax check had been performed on the winning bidders before they received the awards. In all of the cases, there was no evidence of any non-winning qualified receiving a required tax check.

Of the cases where tax checks had been done before the contracts were awarded, three showed unpaid tax balance amounts, and there was no evidence that IRS contracting offices attempted to get more information about the unpaid balances, TIGTA said.