President Obama held a ceremony to accompany the signing of a Presidential Memorandum to address “serious tax delinquencies” of “tens of thousands of companies” who continue to be awarded and perform federal public contracts. According to the Memorandum, the outstanding taxes owed by these companies is “estimated to be more than $5 billion,” while these same companies are paid “more than half a trillion dollars a year” under Federal contracts during the same period.

The President highlighted 3 areas:

1. He called for the IRS to review the accuracy of contractor certifications that all delinquent taxes have been paid and for the OMB to recommend improvements to the process, including the creation of a Government-wide database;
2. He warned that he would insert a provision into the FY11 Budget requiring contractors to have paid their taxes in full before becoming eligible to receive the award of any Federal contract; and
3. He urged Congress to enact legislation, similar to the “Contracting Tax Accountability Act of 2009”, which would ban tax-delinquent contractors from receiving further Federal contract awards. This proposed Act is still in committee in both the House and Senate, and currently defines a “seriously delinquent tax debt” as an “outstanding debt… for which a notice of lien has been filed in public records.”