Contractor Tax Enforcement Act

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4881) to prohibit the awarding of a contract or grant in excess of the simplified acquisition threshold unless the prospective contractor or grantee certifies in writing to the agency awarding the contract or grant that the contractor or grantee has no seriously delinquent tax debts, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days in which to revise and extend their remarks.

Mr. Speaker, I yield myself such time as I may consume.

H.R. 4881, the Contracting and Tax Accountability Act of 2008, is a very simple bill and a very timely bill. It prevents companies that don't pay their taxes from receiving contracts with the Federal Government. Today, people across the country are finishing up their tax returns to submit to the IRS by tomorrow. Nobody likes to pay taxes, but the vast majority of American families and companies obey the law and comply with their responsibilities as citizens and taxpayers.

Unfortunately, some people do not follow the law and have serious delinquencies in paying taxes to the IRS.

What is shocking to me and honest taxpayers across the country is that many companies that didn't pay their taxes were benefiting from Federal Government contracts. GAO studies over the past few years have identified more than 50,000 contractors owing nearly $8 billion in unpaid Federal taxes. This bill will put an end to that problem once and for all.

Mr. Speaker, H.R. 4881 establishes a process to prohibit companies with seriously delinquent Federal tax debt from receiving new Federal contracts and grants. It will reward responsible taxpaying contractors with more opportunities to continue serving the Federal Government for abiding by the law. And it should increase collections because companies will get current on their tax bills if they want to continue receiving Federal contracts. With a mounting Federal budget deficit and rising obligations, the Federal Government cannot afford to leave billions of dollars in tax revenue uncollected.

The sponsor of H.R. 4881, Mr. Ellsworth from Indiana, has put in a lot of work on this bill, and I want to thank him for his efforts. As a former sheriff, he wants to make sure people who break the law are not rewarded.

When we get into contracting and tax law, the law gets complicated. He has worked hard to make sure this law will not have unintended consequences. We also received guidance from our colleagues on the Ways and Means and Joint Tax Committees. I would like to thank my friend from New York (Mr. Rangel) and his staff for their assistance.

Chairman Waxman and Chairman Rangel exchanged letters regarding committee jurisdiction on this bill, and I ask that these letters be placed in the Record.

Mr. Speaker, this bill is of monumental importance to improving fairness and efficiency in Federal contracting. I fully support its passage and urge my colleagues to do the same.

House of Representatives,

Committee on Ways and Means,

Washington, DC, March 12, 2008.

Hon. Henry Waxman,

Chairman, Oversight and Government Reform Committee, Rayburn

House Office Building, Washington, DC.

Dear Henry, I am writing regarding H.R. 4881, the

Contracting and Tax Accountability Act of 2008, which the

Oversight and Government Reform Committee ordered favorably

reported on March 13, 2008. As you know, a similar bill, H.R.

1870, was referred to the Oversight and Government Reform

Committee, as well as to the Committee on Ways and Means.

Section 3 of H.R. 4881 authorizes the Secretary of the

Treasury to disclose to other agencies whether or not a

potential Federal

contractor has a seriously delinquent tax debt as defined by

the bill, and requires the Secretary to develop and issue a

form for this purpose. As you know, Rule X gives the

Committee on Ways and Means jurisdiction over subjects

relating to the U.S. Treasury and tax information being

disclosed to other agencies generally, and we have

successfully asserted jurisdiction over similar legislation.

Because our staffs have worked together to produce this

bipartisan legislation, and in order to expedite this

legislation for Floor consideration, the Committee will forgo

action on this bill, and will not oppose the inclusion of

these provisions within H.R. 4881. This is being done with

the understanding that it does not in any way prejudice the

Committee with respect to its jurisdictional prerogatives on

this bill or similar legislation in the future.

I would appreciate your response to this letter, confirming

this understanding with respect to H.R. 4881, and would ask

that a copy of our exchange of letters on this matter be

included in the record.

Sincerely,

Charles B. Rangel,

Chairman.

Mr. Speaker, at this time, I yield 5 minutes to the gentleman from Indiana, the sponsor of this bill, Mr. Ellsworth.

Mr. Speaker, at this time, I yield as much time as he may consume to the distinguished Chair of the Oversight and Government Reform Committee, the gentleman from California (Mr. Waxman).

Mr. Speaker, I encourage all of my colleagues to vote in favor of this bill.

Mr. Speaker, I yield back the balance of my time.

I would like to thank the gentleman.

Mr. Speaker, I rise today in strong support of the Contracting and Tax Accountability Act of 2008.

Tomorrow is April 15, Tax Day, a day when Americans follow through on their civic obligation by filing their tax returns with the Federal Government. Paying taxes isn't something any of us enjoy doing, but we all do it anyway out of a sense of duty to our country.

Each year, taxpayers play by the rules and pay their share of taxes. I don't think it's too much to ask companies, particularly those who receive Federal Government contracts, to do the very same.

According to the Government Accountability Office report, in 2004 and 2005 alone, government contractors owed the U.S. Treasury over $5 billion, that's billion with a ``b,'' in unpaid Federal taxes. Many of these contractors were closely held businesses that simply gamed the system by withholding employee wages, Social Security, Medicare and individual income taxes and then never sending these withholdings to the IRS.

That doesn't mean that all contractors are cheating the system; in fact, most are not. Most are doing terrific work and putting our tax dollars to good use. But we have a responsibility to protect companies and taxpayer dollars by stopping corrupt contractors from gaming our system. The only way you do that, when they won't do it on their own, is by increased oversight.

This legislation is simple in scope and will go a long way towards ensuring that companies doing business with the Federal Government are doing that in good faith. And by leveling the playing field between contractors, we can better ensure our tax dollars are not used to reward tax cheats.

The Contracting and Tax Accountability Act establishes a process to prevent people who have serious tax delinquent debts from ever receiving Federal contracts or grants. This legislation affirms that it is the policy of the United States that no government contracts or grants should be awarded to individuals or companies with seriously delinquent Federal tax debts. It requires that bids for Federal contracts include a certification that the person does not possess serious delinquent tax debt. An authorization to verify this certification with the Secretary of the Treasury is also required.

The definition of serious delinquent tax debt was carefully defined as an outstanding debt for which a Notice of Lien has been filed in the public record. The definition also excludes tax debt that is being repaid in accordance with an installment agreement, and a tax debt for which a collection due process has been requested.

I would like to thank Chairman Waxman, Chairman Ed Towns for guiding this legislation through his subcommittee, and Mike McCarthy on his staff for lending his expertise. I would also like to thank Senator Barack Obama and Ian Solomon on his staff for their collaboration in the Senate on this important legislation.

Mr. Speaker, the Contracting and Tax Accountability Act is a practical and cost-effective way to ensure all companies who wish to do business with the Federal Government compete on an equal playing field. This legislation protects good faith contractors who are playing by the rules and brings much needed transparency to how our tax dollars are being spent.

I urge my colleagues to pass this bill.

Mr. Speaker, H.R. 4881, introduced by Representative Ellsworth, is a very important bill. It's a simple one. It's a commonsense bill. It would prohibit the award of Federal contracts to companies that don't pay their Federal taxes. It accomplishes this by requiring contractors to certify they do not have a serious delinquent debt, and to authorize the Treasury Department to disclose such information to contracting agencies.

The Federal Government should not be granting Federal contracts to companies that won't pay their taxes. Companies that cheat on their taxes have an unfair competitive advantage when bidding for Federal contracts because their costs are lowered. This bill will level the playing field and restore fairness to the Federal procurement system.

Representative Towns, who is the chairman of the subcommittee, along with Mr. Ellsworth, have put a lot of time and effort into addressing these concerns and in crafting a very good bill, and I want to thank them for all their hard work.

The minority also raised some concerns about previous versions of this legislation, and I also want to thank Representative Tom Davis for working constructively with us to address those issues.

The end product before us today is solid legislation which should have bipartisan support, and which I hope will address this issue once and for all.

I thank Representative Ellsworth for his excellent recommendations in offering this bill and seeing it through to the point where we are now on the House floor. I hope this bill will soon become law.

I urge all my colleagues to vote for H.R. 4881.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise today in support of H.R. 4881, the Contracting and Tax Accountability Act of 2008.

This legislation would subject any firm that has a seriously delinquent tax debt, defined to mean any time the IRS has filed a tax lien against the company, to a debarment proceeding with the aim of preventing the firm from obtaining a government contract or grant.

Potential contractors and grant recipients must certify that the company does not have any seriously delinquent tax debt in order to be eligible for Federal grants and contracts.

This might sound like a reasonable requirement, and it is. In fact, the administration is currently finalizing a regulation that would require Federal contractors and grantees to certify, among other things, that they have not been notified by the IRS of liability for delinquent taxes. The proposed regulation would also include the failure to pay taxes as a specific cause for a company to be debarred from receiving Federal contracts. Since the issue addressed in this legislation is already being addressed through the regulatory process, it is unclear to us whether this legislation is necessary. Nevertheless, we will not object to it.

Mr. Speaker, I yield back the balance of my time.