FederalDaily.com > Contractors Exploit Federal Tax System

FederalDaily - March 16, 2006

Contractors Exploit Federal Tax System

As of June 30, 2005, nearly 4,000 General Services Administration (GSA) contractors had combined tax debts of $1.4 billion, according to a Government Accountability Office (GAO) report revealed this week. Of that total, 25 GSA contractors may be guilty of “abusive and potentially criminal activity,” GAO found. Those contractors had not forwarded withheld payroll and other taxes to the IRS. The report noted that intentional failure to do so is a felony. Presently, GSA and Federal Acquisition Regulations do not require tax debts to be part of the contract awarding process. Furthermore, because federal law prohibits the release of taxpayer data, GSA contracting officers often do not have access to such information. GAO concluded, “GSA contractors that do not pay tax debts could have an unfair competitive advantage in costs because they may have lower costs than tax compliant contractors.”

Sensitive Document Policies Uneven

The federal government has multiple, uncoordinated policies and guidelines for managing sensitive unclassified information, according to the National Security Archive (at The George Washington University in Washington, D.C.). After spending a year analyzing policies from 37 federal agencies, the National Security Archive presented the results at a congressional hearing on Tuesday. Among the more notable findings, only eight agencies have sensitive information policies approved by statute. In addition, no agencies monitor or report on the use or impact of the policy. Eight agencies allow virtually any employee to designate information as sensitive, including the Department of Homeland Security. The National Security Archive concluded that, because of the wide variation of policies, “it is probable that these policies interfere with interagency information sharing, increase the cost of information security, and limit public access to vital information.” The full report is available at: www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB183/SBU%20Report%20final.pdf.

Democrats and Republicans Spar Over VA Health Care

The Senate voted against an amendment to the 2007 Department of Veterans Affairs (VA) budget on Tuesday that would have added $1.5 billion in veterans’ health care funding to offset the proposed increase in co-payments and premiums. Sen. Mark Dayton, D-Minn., a co-sponsor of the bill, said, “It is deplorable that, while thousands of our young men and women are serving our nation in Iraq, we are drastically cutting promised funding to our nation's veterans.” The administration counters that the annual enrollment fee for veterans’ health benefits and higher drug prescription co-payments would apply to “higher-income” veterans. Dayton, however, argues that veterans making as little as $26,902 annually could be affected. Meanwhile, that same day the House Appropriations Committee approved a $375-million increase for the VA medical care budget. Rep. Bud Cramer, R-Ala., said, “We need to make sure that troops returning from Operation Iraqi Freedom and Operation Enduring Freedom get the quality medical care they deserve.”

FEHBP Going Electronic

Government workers enrolled in the Federal Employees Health Benefits Program (FEHBP) may have electronic health care records (EHR) if a new bill called the Federal Family Health Information Technology Act of 2006 is passed. The bill was proposed on March 2 by Rep. John Porter, R-Nev. Porter called the act potentially the largest health information technology (HIT) demonstration project in the country. The bill would require FEHBP insurance carries to generate electronic records for all of their participants. The National Active and Retired Federal Employees Association (NARFE) voiced its support for the initiative, but expressed concern over the funding strategy, which would allow the Office of Personnel Management to use the 1 percent FEHBP administrative fee to cover initial implementation costs.