IRS vendors rack up millions in tax debt

Vendors with the IRS have racked up some $589 million in unpaid taxes, according to a new inspector general report.

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Treasury’s inspector general for tax administration says that 1,168 vendors, or roughly 7 percent of the agency’s vendors, have an unpaid tax debt. Only 50 of those, holding well under 1 percent of that debt, have a plan to pay back the government.

In most cases, agencies aren’t allowed to do business with anyone with an unpaid tax liability.

“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,” Russell George, the tax administration inspector general, said in a statement.

George’s office has previously said that the IRS should check the status of all its vendors’ tax status, but the agency doesn’t agree.

The report also said that the IRS had done a good job of keeping suspended vendors from getting new contracts, even though the agency did hand out $2.6 million to suspended vendors.