| | |  Business News | March 2009 
13 Firms Receiving Federal Bailout Owe Back Taxes
 Stephen Ohlemacher - Associated Press
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 |  | If we looked at all 470 recipients, how much would they owe?"
- Rep. John Lewis |  | | |
Washington - At least 13 companies receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said Thursday.
Rep. John Lewis, D-Ga., chairman of a House subcommittee overseeing the federal bailout, said two companies owe more than $100 million apiece.
"This is shameful. It is a disgrace," said Lewis. "We are going to get to the bottom of what is going on here."
The House Ways and Means subcommittee on oversight discovered the unpaid taxes in a review of tax records from 23 companies receiving the most money, Lewis said as he opened a hearing on the issue.
The committee said it could not legally release the names of the companies owing taxes. It said one recipient of bailout money had almost $113 million in unpaid federal income taxes from 2005 and 2006. A second recipient owed almost $102 million dating to before 2004. Another was behind $1.1 million in federal income taxes and $223,000 in federal employment taxes.
"If we looked at all 470 recipients, how much would they owe?" Lewis asked.
Lewis said the panel plans to review tax records from other firms receiving federal money, but he was unsure if it would look at every one of them.
"We're not done," he said.
Banks and other companies receiving federal money were required to sign contracts stating they had no unpaid taxes, Lewis said. But he said the Treasury Department did not ask them to turn over their tax records.
Neil Barofsky, special inspector general for the Troubled Asset Relief Program, told the hearing that if an executive signed a contract knowing that information about unpaid taxes was false, "that would potentially be a crime." He said his office will look to see if crimes were committed.
No one from the Treasury Department appeared at Thursday's hearing. Lewis said he asked Treasury officials for a private briefing on their efforts to uncover unpaid taxes, as well as someone to testify at Thursday's hearing.
"They said no one was available," Lewis said in an interview.
The Internal Revenue Service "has every expectation that these amounts will be paid and is committed to collect every dollar of taxes that are owed," IRS spokesman Frank Keith said in a statement. "The IRS recognizes that those entities that receive taxpayer support have a special obligation to pay their taxes, and these taxpayer accounts will remain closely monitored by the IRS to ensure that the full amount of taxes due are paid."
Keith noted there could be many reasons why a taxpayer has an unpaid balance. For example, taxpayers could be challenging their bills.
"In and of itself, this does not signal any intent not to pay," Keith said.
Treasury Secretary Timothy Geithner is already under fire on Capitol Hill for not preventing $165 million in bonuses from being paid to employees at troubled insurance giant AIG.
People will ask, said Rep. Artur Davis, D-Ala., why there are "large companies getting taxpayer dollars, making false representations, and we can't even name them, much less make them pay the money back, much less prosecute them."
Davis continued: "Will they get their day on a billboard, hopefully?"
"Absolutely," said Barofsky. If someone lied, he said, "They need to be prosecuted."
Davis announced Thursday evening that he would introduce a bill requiring the IRS to certify that companies are current in their federal taxes to qualify for federal bailout money.
The revelation is sure to spark more criticism on Capitol Hill, where the House is expected to vote Thursday on a bill that would impose steep taxes on employee bonuses at AIG and other companies that have received bailout money.
To date, the Troubled Asset Relief Program, or TARP, has paid out more than $300 billion to private companies, with billions more on the way. |
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