IRS' lips sealed on globetrotting State contractors with big tax bills, GAO says

Current law precludes handing State Department names of $100K-plus delinquents

The Government Accountability Office and Internal Revenue Service have their hands tied with regard to notifying the State Department that two State contractors traveling the globe owe more than $100,000 in unpaid taxes to the U.S. Treasury, according to a new report from the GAO.

The two contractors “traveled to Europe, Asia, and the Caribbean performing work for State. These individuals were, or are, potentially performing sensitive work for the Department of State on behalf of the United States,” the GAO report of April 11 said.

However, neither the IRS nor the GAO is permitted to reveal the names of the contractors to State under current law, the report added.

“However, 26 U.S.C. 6103 precludes IRS from disclosing their names to State, and precludes us from both disclosing their names to State and from contacting State to determine whether these individuals have security clearances,” the report said.

The GAO identified the contractors while investigating 25 tax delinquents who recently have been issued U.S. passports.

The GAO suggests that Congress consider authorizing the State Department to deny U.S. passports to individuals who owe substantial unpaid taxes. Currently, there are no such restrictions. If Congress passed such restrictions into law, that would assist in collecting back taxes and reduce the national debt, the report said.

In fiscal 2008, the State Department issued passports to 224,000 people who collectively owed $5.8 billion in unpaid federal taxes. Overall, about 16 million passports were issued that year.

The GAO report contained additional information on one of the State contractors, who owes $100,000 in unpaid taxes.

  • The person owed taxes for several years throughout the 1990s and 2000s, and did not file income tax returns for two recent years.
  • The individual was assessed thousands of dollars in trust fund recovery penalties for failure to pay employment taxes in the mid-2000s. The IRS found that the individual willfully failed to collect, account for, or pay over to IRS the employees’ share of the trust fund taxes.
  • The person has a long history of noncompliance and has been “uncooperative” in making arrangements to satisfy the outstanding tax liability.
  • The IRS filed tax liens against the individual’s property. IRS has referred the person to the Treasury Department for the continuous levy program.
  • The individual recently made trips to Middle East, Europe, Africa, and the Caribbean and also went on an international cruise.

The other State contractor was not described in detail.

The IRS and State declined to provide comments for the report.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

Reader Comments

Wed, Apr 13, 2011

Why not just put them on a list of people not allowed on a plane or boat with the homeland security? Once they try to leave put them in jail until they post a bail for the amount of the tax owed? If they are innocent they get there money back. If not we collect the bail money to cover the taxes. No need to create more laws.

Wed, Apr 13, 2011

Left hand, meet right foot. Sounds like business as usual.

Wed, Apr 13, 2011 Olde Sarge Washington, DC

I thought Congress passed legislation ordeering the IRS to notify federal agencies of contractors who owed delinquint taxes. Regardles, issue arrest warrants and detain these yahoos for tax debt. Put them on trial convict them, if they can't pay up, put them in prison. By then they will have defaulted on their contracts with State.

Wed, Apr 13, 2011

The GAO recommendation represents more erosion of our freedoms. How is a passport logically related to a tax debt? Should we also deny people who owe back taxes drivers licenses? Food? Shelter? Personal freedom? The IRS has plenty of ways to collect this tax debt; no need to give them even more coercive tools.

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