Stimulus Package Program Marred By Unpaid
Stimulus Package System Marred by Unpaid Taxes
In February 2009, Congress passed a law to put funds into the private sector via a stimulus package in a bid to jump start the economic climate that was suffering via a recession. Congress passed the bill which lead to $821 billion getting channeled onto the economic system by way of grants, contracts, loans, and other financial automobiles. $275 billion was specifically set aside for grants and contracts. Of these funds set aside for grants and contracts, about $200 billion had already been released as of March 2011.
Report by the GAO
A report by the Government Accountability Office (GAO) released to Congress and other national policy bodies revealed shocking news about some of the recipients of the grant and contract cash. According to the report, three,700 of the contracts issued by the government underneath the stimulus packages went to organizations that had outstanding tax debts. As of August 2009, the organizations owed $757 million in due taxes and although having received $24 billion at the identical time in stimulus funds. Additionally, about a third of the taxes due were owed from prior to 2003 and have been consequently, extremely long overdue. The contractors accounted to virtually 6% of all the contracts issued under the stimulus package. In addition, the report only put into account the taxes that were excellent as per recorded tax returns and did not account for unreported incomes. This means that the actual figures could be considerably greater than those presented. This report revealed that tax delinquents freely enjoyed the benefits of the stimulus package with no accountability to their tax obligations.
Case in Point
Of the $757 million owed in back taxes, more than half represented unpaid corporate taxes with the rest getting payroll taxes and unemployment taxes amongst other folks. For illustration, a single of the government contractors with unpaid taxes was an engineering firm that had about $6 million in unpaid taxes and received $100,000.00 in contract funds under the stimulus package. A charity organization on the other hand, had tax debts of $2 million and received funds amounting to $1 million. An additional a single of the circumstances presented by the GAO regarded a safety firm that had $9 million in due taxes, mostly employment taxes from close to 2005, which received above $100,000.00 in stimulus contracts. This firm had paid off all its other credits even though leaving their tax debt excellent. The firm had also missed many earlier tax deadlines and had records of repeated appeals to preserve tax debts pending. The firm had also bordered on tax frivolousness. The GAO forwarded these instances amongst twelve other individuals to the IRS for further investigation. The IRS admitted that such outrageous situations have been “extreme noncompliance cases.”
Reactions and Responses
Following the report assembled by the GAO, an upheaval resulted from disgruntled taxpayers who voiced their disapproval on the handling of the stimulus package. Understandably, they were deeply disturbed by the truth that funds that had been drawn from responsible and reputable taxpayers have been handed out to delinquent taxpayers. Republican Senator Tom Coburn of Oklahoma stated that it indeed, questions all fairness to have tax money given to tax cheats and that the government ought to evaluation its policies to make certain that such situations do not reoccur. Democratic Senator Carl Levin from Michigan, who also chaired the investigations sub-committee that received the GOA report, stated that a government system had been set up to collect funds from the firms that owed taxes. He also stated that the government was looking for a way of barring organizations with due taxes from obtaining government contracts.
The Republican politicians took the chance presented by the report to discredit the Obama government, saying that billions of dollars have been carelessly issued with quite little scrutiny. On the other side, the Democrats and the Obama administration had been keen to support and build accountability behind the stimulus program in a bid to recover the assurance of the program.
(MAN3454c11)
VA United Green, Stimulus Package – Series 3, Grants