[Congressional Record Volume 154, Number 58 (Monday, April 14, 2008)]
[House]
[Pages H2234-H2237]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             CONTRACTING AND TAX ACCOUNTABILITY ACT OF 2008

  Mr. BRALEY of Iowa. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 4881) to prohibit the awarding of a contract or grant in 
excess of the simplified acquisition threshold unless the prospective 
contractor or grantee certifies in writing to the agency awarding the 
contract or grant that the contractor or grantee has no seriously 
delinquent tax debts, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 4881

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Contracting and Tax 
     Accountability Act of 2008''.

     SEC. 2. GOVERNMENTAL POLICY.

       It is the policy of the United States Government that no 
     Government contracts or grants should be awarded to 
     individuals or companies with seriously delinquent Federal 
     tax debts.

     SEC. 3. PROHIBITION ON AWARDING OF CONTRACTS TO DELINQUENT 
                   FEDERAL DEBTORS.

       Section 3720B of title 31, United States Code, is amended--

[[Page H2235]]

       (1) in the section heading, by adding at the end ``OR 
     CONTRACTS'';
       (2) by adding at the end the following:
       ``(c)(1) Unless this subsection is waived by the head of a 
     Federal agency, a person who has a seriously delinquent tax 
     debt shall be proposed for debarment from any contract 
     awarded by the Federal Government.
       ``(2) The head of any Federal agency that issues an 
     invitation for bids or a request for proposals for a contract 
     in an amount greater than the simplified acquisition 
     threshold (as defined in section 4(11) of the Office of 
     Federal Procurement Policy Act (41 U.S.C. 401(11)) shall 
     require each person that submits a bid or proposal to submit 
     with the bid or proposal a form--
       ``(A) certifying that the person does not have a seriously 
     delinquent tax debt; and
       ``(B) authorizing the Secretary of the Treasury to disclose 
     to the head of the agency information limited to describing 
     whether the person has a seriously delinquent tax debt.
       ``(3) The Secretary shall make available to all Federal 
     agencies a standard form for the certification and 
     authorization described in paragraph (2).
       ``(4) Not later than 270 days after the date of enactment 
     of this subsection, the Federal Acquisition Regulation shall 
     be revised to incorporate the requirements of this 
     subsection.
       ``(5) For purposes of this subsection:
       ``(A) The term `contract' means a binding agreement entered 
     into by a Federal agency for the purpose of obtaining 
     property or services, but does not include--
       ``(i) a contract designated by the head of the agency as 
     assisting the agency in the performance of disaster relief 
     authorities; or
       ``(ii) a contract designated by the head of the agency as 
     necessary to the national security of the United States.
       ``(B)(i) The term `person' includes--
       ``(I) an individual;
       ``(II) a partnership; and
       ``(III) a corporation.
       ``(ii) A partnership shall be treated as a person with a 
     seriously delinquent tax debt if such partnership has a 
     partner who--
       ``(I) holds an ownership interest of 50 percent or more in 
     that partnership; and
       ``(II) who has a seriously delinquent tax debt.
       ``(iii) A corporation shall be treated as a person with a 
     seriously delinquent tax debt if such corporation has an 
     officer or a shareholder who--
       ``(I) holds 50 percent or more, or a controlling interest 
     that is less than 50 percent, of the outstanding shares of 
     corporate stock in that corporation; and
       ``(II) who has a seriously delinquent tax debt.
       ``(C)(i) The term `seriously delinquent tax debt' means an 
     outstanding debt under the Internal Revenue Code of 1986 for 
     which a notice of lien has been filed in public records 
     pursuant to section 6323 of such Code.
       ``(ii) Such term does not include--
       ``(I) a debt that is being paid in a timely manner pursuant 
     to an agreement under section 6159 or section 7122 of such 
     Code; and
       ``(II) a debt with respect to which a collection due 
     process hearing under section 6330 of such Code, or relief 
     under subsections (a), (b), or (f) of section 6015 of such 
     Code, is requested or pending.''.

     SEC. 4. PROHIBITION ON AWARDING OF GRANTS TO DELINQUENT 
                   FEDERAL DEBTORS.

       (a) In General.--The head of any Executive agency that 
     offers a grant in excess of an amount equal to the simplified 
     acquisition threshold (as defined in section 4(11) of the 
     Office of Federal Procurement Policy Act (41 U.S.C. 401(11)) 
     may not award such grant to any person unless such person 
     submits with the application for such grant a form--
       (1) certifying that the person does not have a seriously 
     delinquent tax debt; and
       (2) authorizing the Secretary of the Treasury to disclose 
     to the head of the Executive agency information limited to 
     describing whether the person has a seriously delinquent tax 
     debt.
       (b) Release of Information.--The Secretary shall make 
     available to all Executive agencies a standard form for the 
     certification and authorization described in subsection 
     (a)(2).
       (c) Revision of Regulations.--Not later than 270 days after 
     the date of the enactment of this section, the Director of 
     the Office of Management and Budget shall revise such 
     regulations as necessary to incorporate the requirements of 
     this section.
       (d) Definitions and Special Rules.--For purposes of this 
     section:
       (1) Person.--
       (A) In general.--The term ``person'' includes--
       (i) an individual;
       (ii) a partnership; and
       (iii) a corporation.
       (B) Treatment of certain partnerships.--A partnership shall 
     be treated as a person with a seriously delinquent tax debt 
     if such partnership has a partner who--
       (i) holds an ownership interest of 50 percent or more in 
     that partnership; and
       (ii) who has a seriously delinquent tax debt.
       (C) Treatment of certain corporations.--A corporation shall 
     be treated as a person with a seriously delinquent tax debt 
     if such corporation has an officer or a shareholder who--
       (i) holds 50 percent or more, or a controlling interest 
     that is less than 50 percent, of the outstanding shares of 
     corporate stock in that corporation; and
       (ii) who has a seriously delinquent tax debt.
       (2) Executive agency.--The term ``executive agency'' has 
     the meaning given such term in section 4 of the Office of 
     Federal Procurement Policy Act (41 U.S.C. 403).
       (3) Seriously delinquent tax debt.--
       (A) In general.--The term ``seriously delinquent tax debt'' 
     means an outstanding debt under the Internal Revenue Code of 
     1986 for which a notice of lien has been filed in public 
     records pursuant to section 6323 of such Code.
       (B) Exceptions.--Such term does not include--
       (i) a debt that is being paid in a timely manner pursuant 
     to an agreement under section 6159 or section 7122 of such 
     Code; and
       (ii) a debt with respect to which a collection due process 
     hearing under section 6330 of such Code, or relief under 
     subsections (a), (b), or (f) of section 6015 of such Code, is 
     requested or pending.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Iowa (Mr. Braley) and the gentlewoman from North Carolina (Ms. Foxx) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Iowa.


                             General Leave

  Mr. BRALEY of Iowa. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days in which to revise and extend their 
remarks.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Iowa?
  There was no objection.
  Mr. BRALEY of Iowa. Mr. Speaker, I yield myself such time as I may 
consume.
  H.R. 4881, the Contracting and Tax Accountability Act of 2008, is a 
very simple bill and a very timely bill. It prevents companies that 
don't pay their taxes from receiving contracts with the Federal 
Government. Today, people across the country are finishing up their tax 
returns to submit to the IRS by tomorrow. Nobody likes to pay taxes, 
but the vast majority of American families and companies obey the law 
and comply with their responsibilities as citizens and taxpayers.

                              {time}  1500

  Unfortunately, some people do not follow the law and have serious 
delinquencies in paying taxes to the IRS.
  What is shocking to me and honest taxpayers across the country is 
that many companies that didn't pay their taxes were benefiting from 
Federal Government contracts. GAO studies over the past few years have 
identified more than 50,000 contractors owing nearly $8 billion in 
unpaid Federal taxes. This bill will put an end to that problem once 
and for all.
  Mr. Speaker, H.R. 4881 establishes a process to prohibit companies 
with seriously delinquent Federal tax debt from receiving new Federal 
contracts and grants. It will reward responsible taxpaying contractors 
with more opportunities to continue serving the Federal Government for 
abiding by the law. And it should increase collections because 
companies will get current on their tax bills if they want to continue 
receiving Federal contracts. With a mounting Federal budget deficit and 
rising obligations, the Federal Government cannot afford to leave 
billions of dollars in tax revenue uncollected.
  The sponsor of H.R. 4881, Mr. Ellsworth from Indiana, has put in a 
lot of work on this bill, and I want to thank him for his efforts. As a 
former sheriff, he wants to make sure people who break the law are not 
rewarded.
  When we get into contracting and tax law, the law gets complicated. 
He has worked hard to make sure this law will not have unintended 
consequences. We also received guidance from our colleagues on the Ways 
and Means and Joint Tax Committees. I would like to thank my friend 
from New York (Mr. Rangel) and his staff for their assistance.
  Chairman Waxman and Chairman Rangel exchanged letters regarding 
committee jurisdiction on this bill, and I ask that these letters be 
placed in the Record.
  Mr. Speaker, this bill is of monumental importance to improving 
fairness and efficiency in Federal contracting. I fully support its 
passage and urge my colleagues to do the same.

                                         House of Representatives,


                                  Committee on Ways and Means,

                                   Washington, DC, March 12, 2008.
     Hon. Henry Waxman,
     Chairman, Oversight and Government Reform Committee, Rayburn 
         House Office Building, Washington, DC.
       Dear Henry, I am writing regarding H.R. 4881, the 
     Contracting and Tax Accountability Act of 2008, which the 
     Oversight and Government Reform Committee ordered favorably 
     reported on March 13, 2008. As you know, a similar bill, H.R. 
     1870, was referred to the Oversight and Government Reform 
     Committee, as well as to the Committee on Ways and Means.
       Section 3 of H.R. 4881 authorizes the Secretary of the 
     Treasury to disclose to other agencies whether or not a 
     potential Federal

[[Page H2236]]

     contractor has a seriously delinquent tax debt as defined by 
     the bill, and requires the Secretary to develop and issue a 
     form for this purpose. As you know, Rule X gives the 
     Committee on Ways and Means jurisdiction over subjects 
     relating to the U.S. Treasury and tax information being 
     disclosed to other agencies generally, and we have 
     successfully asserted jurisdiction over similar legislation.
       Because our staffs have worked together to produce this 
     bipartisan legislation, and in order to expedite this 
     legislation for Floor consideration, the Committee will forgo 
     action on this bill, and will not oppose the inclusion of 
     these provisions within H.R. 4881. This is being done with 
     the understanding that it does not in any way prejudice the 
     Committee with respect to its jurisdictional prerogatives on 
     this bill or similar legislation in the future.
       I would appreciate your response to this letter, confirming 
     this understanding with respect to H.R. 4881, and would ask 
     that a copy of our exchange of letters on this matter be 
     included in the record.
           Sincerely,
                                                Charles B. Rangel,
     Chairman.
                                  ____

         House of Representatives, Committee on Oversight and 
           Government Reform,
                                   Washington, DC, April 11, 2008.
     Hon. Charles B. Rangel,
     Chairman, Committee on Ways and Means, Longworth House Office 
         Building, Washington, DC.
       Dear Mr. Chairman: Thank you for your letter regarding H.R. 
     4881, the Contracting and Tax Accountability Act of 2008, 
     which the Committee on Oversight and Government Reform 
     reported, as amended, on April 10, 2008.
       I appreciate your willingness to work cooperatively on this 
     legislation and I recognize that the bill contains provisions 
     that fall within the jurisdiction of the Committee on Ways 
     and Means. I agree that your inaction with respect to this 
     bill does not prejudice the Ways and Means Committee's 
     interests and prerogatives regarding this bill or similar 
     legislation.
       I will ensure that our exchange of letters is included in 
     the Congressional Record during consideration on the House 
     floor of H.R. 4881.
           Sincerely,
                                                  Henry A. Waxman,
                                                         Chairman.

  Mr. Speaker, I reserve the balance of my time.
  Ms. FOXX. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in support of H.R. 4881, the Contracting 
and Tax Accountability Act of 2008.
  This legislation would subject any firm that has a seriously 
delinquent tax debt, defined to mean any time the IRS has filed a tax 
lien against the company, to a debarment proceeding with the aim of 
preventing the firm from obtaining a government contract or grant.
  Potential contractors and grant recipients must certify that the 
company does not have any seriously delinquent tax debt in order to be 
eligible for Federal grants and contracts.
  This might sound like a reasonable requirement, and it is. In fact, 
the administration is currently finalizing a regulation that would 
require Federal contractors and grantees to certify, among other 
things, that they have not been notified by the IRS of liability for 
delinquent taxes. The proposed regulation would also include the 
failure to pay taxes as a specific cause for a company to be debarred 
from receiving Federal contracts. Since the issue addressed in this 
legislation is already being addressed through the regulatory process, 
it is unclear to us whether this legislation is necessary. 
Nevertheless, we will not object to it.
  Mr. Speaker, I yield back the balance of my time.
  Mr. BRALEY of Iowa. Mr. Speaker, at this time, I yield 5 minutes to 
the gentleman from Indiana, the sponsor of this bill, Mr. Ellsworth.
  Mr. ELLSWORTH. I would like to thank the gentleman.
  Mr. Speaker, I rise today in strong support of the Contracting and 
Tax Accountability Act of 2008.
  Tomorrow is April 15, Tax Day, a day when Americans follow through on 
their civic obligation by filing their tax returns with the Federal 
Government. Paying taxes isn't something any of us enjoy doing, but we 
all do it anyway out of a sense of duty to our country.
  Each year, taxpayers play by the rules and pay their share of taxes. 
I don't think it's too much to ask companies, particularly those who 
receive Federal Government contracts, to do the very same.
  According to the Government Accountability Office report, in 2004 and 
2005 alone, government contractors owed the U.S. Treasury over $5 
billion, that's billion with a ``b,'' in unpaid Federal taxes. Many of 
these contractors were closely held businesses that simply gamed the 
system by withholding employee wages, Social Security, Medicare and 
individual income taxes and then never sending these withholdings to 
the IRS.
  That doesn't mean that all contractors are cheating the system; in 
fact, most are not. Most are doing terrific work and putting our tax 
dollars to good use. But we have a responsibility to protect companies 
and taxpayer dollars by stopping corrupt contractors from gaming our 
system. The only way you do that, when they won't do it on their own, 
is by increased oversight.
  This legislation is simple in scope and will go a long way towards 
ensuring that companies doing business with the Federal Government are 
doing that in good faith. And by leveling the playing field between 
contractors, we can better ensure our tax dollars are not used to 
reward tax cheats.
  The Contracting and Tax Accountability Act establishes a process to 
prevent people who have serious tax delinquent debts from ever 
receiving Federal contracts or grants. This legislation affirms that it 
is the policy of the United States that no government contracts or 
grants should be awarded to individuals or companies with seriously 
delinquent Federal tax debts. It requires that bids for Federal 
contracts include a certification that the person does not possess 
serious delinquent tax debt. An authorization to verify this 
certification with the Secretary of the Treasury is also required.
  The definition of serious delinquent tax debt was carefully defined 
as an outstanding debt for which a Notice of Lien has been filed in the 
public record. The definition also excludes tax debt that is being 
repaid in accordance with an installment agreement, and a tax debt for 
which a collection due process has been requested.
  I would like to thank Chairman Waxman, Chairman Ed Towns for guiding 
this legislation through his subcommittee, and Mike McCarthy on his 
staff for lending his expertise. I would also like to thank Senator 
Barack Obama and Ian Solomon on his staff for their collaboration in 
the Senate on this important legislation.
  Mr. Speaker, the Contracting and Tax Accountability Act is a 
practical and cost-effective way to ensure all companies who wish to do 
business with the Federal Government compete on an equal playing field. 
This legislation protects good faith contractors who are playing by the 
rules and brings much needed transparency to how our tax dollars are 
being spent.
  I urge my colleagues to pass this bill.
  Mr. BRALEY of Iowa. Mr. Speaker, at this time, I yield as much time 
as he may consume to the distinguished Chair of the Oversight and 
Government Reform Committee, the gentleman from California (Mr. 
Waxman).
  Mr. WAXMAN. Mr. Speaker, H.R. 4881, introduced by Representative 
Ellsworth, is a very important bill. It's a simple one. It's a 
commonsense bill. It would prohibit the award of Federal contracts to 
companies that don't pay their Federal taxes. It accomplishes this by 
requiring contractors to certify they do not have a serious delinquent 
debt, and to authorize the Treasury Department to disclose such 
information to contracting agencies.
  The Federal Government should not be granting Federal contracts to 
companies that won't pay their taxes. Companies that cheat on their 
taxes have an unfair competitive advantage when bidding for Federal 
contracts because their costs are lowered. This bill will level the 
playing field and restore fairness to the Federal procurement system.
  Representative Towns, who is the chairman of the subcommittee, along 
with Mr. Ellsworth, have put a lot of time and effort into addressing 
these concerns and in crafting a very good bill, and I want to thank 
them for all their hard work.
  The minority also raised some concerns about previous versions of 
this legislation, and I also want to thank Representative Tom Davis for 
working constructively with us to address those issues.
  The end product before us today is solid legislation which should 
have bipartisan support, and which I hope will address this issue once 
and for all.

[[Page H2237]]

  I thank Representative Ellsworth for his excellent recommendations in 
offering this bill and seeing it through to the point where we are now 
on the House floor. I hope this bill will soon become law.
  I urge all my colleagues to vote for H.R. 4881.
  Mr. BRALEY of Iowa. Mr. Speaker, I encourage all of my colleagues to 
vote in favor of this bill.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Iowa (Mr. Braley) that the House suspend the rules and 
pass the bill, H.R. 4881, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________