Panel bars delinquent taxpayers from federal contracts

Delinquent federal taxpayers would be barred from receiving federal contracts or loans under a bill approved Thursday by a House Government Reform subcommittee.

The Government Management, Information and Technology subcommittee cleared the measure (H.R. 4181) on a voice vote after passing an amendment in the nature of a substitute offered by the bill's sponsor, Rep. Jim Turner, D-Texas.

The bill expands the Debt Collection Improvement Act, which bans delinquent non-tax debtors from receiving federal loans or loan guarantees. That law-which covers loans for education, housing and small business development-does not apply to those who owe federal taxes.

Turner's amendment, which also passed by voice vote, addressed several concerns raised during an earlier hearing on the legislation. Under the amendment, tax debtors involved in a dispute with the Internal Revenue Service would not be penalized, a spokesman for Turner's office said. In addition, the measure would not be implemented for 30 months, to give the IRS time to update its computer systems. New federal loan and contract applicants would have to stipulate that that they do not owe federal back taxes.

Federal tax debtors owe the government an estimated $231 billion, according to the Subcommittee. Of that amount, about $50 billion was incurred by nearly two million business owners who collected payroll taxes from their workers but failed to forward the money to the federal government.

"It's time to close the loophole in our current law which allows businesses that refuse to pay their federal taxes to continue to receive federal loans and contracts," Turner said when the bill was introduced in April. "The benefits of our government should be reserved for those who play by the rules."