- The Washington Times - Wednesday, January 20, 2010

President Obama on Wednesday ordered federal agencies to keep tax deadbeats from being awarded federal contracts.

“All across this country, there are people who meet their obligations each and every day,” the president said at the White House. “You do your jobs. You support your families. You pay the taxes you owe because it’s a fundamental responsibility of citizenship.”

Mr. Obama issued the order through a presidential memorandum, which sidesteps congressional approval. However, he asked Congress to approve legislation by Sen. Claire McCaskill, Missouri Democrat, and Rep. Brad Ellsworth, Indian Democrat, to allow the IRS to crack down on corporate tax-cheats and allow the IRS to share information with other federal agencies to ensure scofflaws do not exploit loophole to win federal contracts.

The president said he issued the directive to stop the “standard practice” in Washington of giving contracts to companies that fail to pay their taxes. He cited studies showing government contracts being awarded to tens of thousands of companies owing a collective $5 billion in back taxes.

Mr. Obama said one past-due owner received a $1 million defense contract, then used the money to buy a boat, cars and a home abroad.

“The status quo, then, is inefficient and wasteful,” he said. “But the larger, more fundamental point is that it’s wrong. It is simply wrong for companies to take taxpayer dollars and not be taxpayers themselves.”

The directive goes directly to the president’s Cabinet secretaries and will be executed largely through the IRS, the White House budget office and the Treasury Department.

The IRS also will review of accuracy of companies’ tax filing and payments.

The White House said the directive builds on earlier efforts: including one to cut high-risk, no-bid contracts that is projected to save federal agencies $19 billion this year and $40 billion by the end of 2011.

In addition, the president several months ago outlined steps to crack down on wasteful, improper payments that were projected last year to reach about $100 billion. The administration also last year identified more than 120 federal programs that it says are wasteful, duplicative or outdated.

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