GAO: Billions in stimulus contracts went to tax delinquents

A Senate panel on Tuesday will examine how more than $24 billion in stimulus funds went to contractors or organizations that owe the federal government millions in back taxes. 

A new report issued by the Government Accountability Office (GAO) found 3,700 contractors and grantees that received stimulus funds owed a combined $757 million in back taxes. 

“That such a huge amount of the stimulus money went to known tax cheats should be a wakeup call for Congress,” said Sen. Tom CoburnThomas (Tom) Allen CoburnThe Hill's Morning Report — Presented by PhRMA — Worries grow about political violence as midterms approach President Trump’s war on federal waste American patients face too many hurdles in regard to health-care access MORE (R-Okla.), one of the five lawmakers who requested the report. 

Coburn and Sen. Carl LevinCarl Milton LevinListen, learn and lead: Congressional newcomers should leave the extremist tactics at home House Democrats poised to set a dangerous precedent with president’s tax returns The Hill's 12:30 Report — Sponsored by Delta Air Lines — White House to 'temporarily reinstate' Acosta's press pass after judge issues order | Graham to take over Judiciary panel | Hand recount for Florida Senate race MORE (D-Mich.) are scheduled to hold a Senate Permanent Subcommittee on Investigations hearing on the matter Tuesday afternoon. Coburn and Levin released some of the report’s findings in advance of the hearing.

Levin noted that the executive branch had already stressed that contractors could be denied certain awards if they had not paid taxes. 

“Now the executive branch should get on with it and actually debar the worst of the tax cheats from the contractor workforce,” he said.

The stimulus, which cost an estimated $787 billion when it was approved by Congress, is credited by the White House and most Democrats with preventing a deeper recession. Republicans, however, railed against the measure, noting that unemployment and the nation's debt rose after it was approved. 

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Sens. Max BaucusMax Sieben BaucusOvernight Defense: McCain honored in Capitol ceremony | Mattis extends border deployment | Trump to embark on four-country trip after midterms Congress gives McCain the highest honor Judge boots Green Party from Montana ballot in boost to Tester MORE (D-Mont.), the chairman of the Senate Finance Committee; Orrin HatchOrrin Grant HatchTrump to award racing legend Roger Penske with Presidential Medal of Freedom Trump awards Presidential Medal of Freedom to economist, former Reagan adviser Arthur Laffer Second ex-Senate staffer charged in aiding doxxing of GOP senators MORE (R-Utah), the panel's ranking member; and Chuck GrassleyCharles (Chuck) Ernest GrassleyScandal in Puerto Rico threatens chance at statehood Poll: McConnell is most unpopular senator Democrat: Treasury 'acknowledged the unprecedented process' in Trump tax return rejection MORE (R-Utah), the ranking member on the Senate Judiciary Committee, also called for the report from the GAO, Congress’s investigative arm. 

GAO signaled that the problem of stimulus funds going to those with outstanding tax bills was probably broader than it had identified. 

In all, investigators looked at 63,000 taxpayers and organizations, finding that close to 6 percent of them owed back taxes. Roughly a third of the tax debts were from before 2003, well before the stimulus package was enacted. 

The report also discusses, among other cases, a nonprofit owing more than $2 million in payroll taxes that was awarded more than $1 million in stimulus funds. The nonprofits’s chief executive was also known to have made numerous trips to a casino. 

In another case, a security company cited for labor violations and dubbed uncooperative by the IRS received a contract worth more than $100,000, despite owing more than $9 million in taxes.