Almost 700 employees of companies contracted by the Internal Revenue Service owe $5.4 million in back taxes, according to a report released Wednesday by the tax agency's inspector general.
The IRS requires that its employees file their tax returns on time and pay any outstanding debts, but the agency doesn't hold its contractors to the same standard, the report's author said.
"Because many contractor employees have access to sensitive IRS systems and facilities, the IRS should address tax noncompliance for these employees in a similar manner as it would for its own employees," said J. Russell George, the Treasury's inspector general for tax administration.
Investigators found that 691 employees at businesses that contract with the IRS owed $5.4 million in unpaid taxes. It's a small number of people — roughly 5 percent of all contractor staff — but the inspector general said they should be held to the same standard as government employees.
About half of the individuals were already on IRS-approved plans to repay the debt, which the government considers acceptable as a condition for contracting work. But the other half were not on payment plans and still owed the government $2.7 million.
The IRS said it agreed with the inspector general and would start monitoring contractors more closely.
"The IRS remains committed to working with all contractor employees to help resolve their tax liabilities," a response from the agency said.
Per person, roughly 80 percent of the contractor employees owed the government less than $10,000.
The IRS investigates the tax status of contractors every five years, or sooner if those companies get a contract after not having one for two years.
But investigators said they found 30 individuals who had tax debt from longer than five years, something the IRS should have caught.
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