While federal law largely prohibits agencies from contracting with businesses that have federal tax debt, vendors doing business with the nation’s tax collecting body owe the government hundreds of millions of dollars.
In an audit released Wednesday, the Treasury Inspector General for Tax Administration found that while the majority of the IRS’s vendors were in line with their federal taxes, 1,168 IRS vendors owed a combined federal tax debt of $589 million.
Those 1,168 vendors received about $741 million in payments between Oct. 1, 2010 and June 30, 2012. The 1,168 represented just seven percent of the agency’s vendors.
“When the IRS conducts business with vendors that do not comply with Federal tax laws, it conveys a contradictory message in relation to its mission to ensure compliance with the tax laws,” J. Russell George, Treasury Inspector General for Tax Administration, said in a statement.
According to the report, as of July 2, 2012, 96 percent of the vendors with tax debts (or 1,118 vendors) totaling $587 million were not on current payment plans.
The audit was conducted to gauge the controls on the IRS vendor tax compliance. TIGTA made a few recommendations with which the IRS agree.