[Congressional Record Volume 161, Number 54 (Wednesday, April 15, 2015)]
[House]
[Pages H2241-H2243]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1515
CONTRACTING AND TAX ACCOUNTABILITY ACT OF 2015
Mr. CHAFFETZ. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 1562) 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.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1562
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 2015''.
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. DISCLOSURE AND EVALUATION OF CONTRACT OFFERS FROM
DELINQUENT FEDERAL DEBTORS.
(a) In General.--The head of any executive agency that
issues an invitation for bids or a request for proposals for
a contract in an amount greater than the simplified
acquisition threshold shall require each person that submits
a bid or proposal to submit with the bid or proposal 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 agency information limited to describing
whether the person has a seriously delinquent tax debt.
(b) Impact on Responsibility Determination.--The head of
any executive agency, in evaluating any offer received in
response to a solicitation issued by the agency for bids or
proposals for a contract, shall consider a certification that
the offeror has a seriously delinquent tax debt to be
definitive proof that the offeror is not a responsible source
as defined in section 113 of title 41, United States Code.
(c) Debarment.--
(1) Requirement.--Except as provided in paragraph (2), the
head of an executive agency shall initiate a suspension or
debarment proceeding against a person after receiving an
offer for a contract from such person if--
(A) such offer contains a certification (as required under
subsection (a)(1)) that such person has a seriously
delinquent tax debt; or
(B) the head of the agency receives information from the
Secretary of the Treasury (as authorized under subsection
(a)(2)) demonstrating that such a certification submitted by
such person is false.
(2) Waiver.--The head of an executive agency may waive
paragraph (1) with respect to a person based upon a written
finding of urgent and compelling circumstances significantly
affecting the interests of the United States. If the head of
an executive agency waives paragraph (1) for a person, the
head of the agency shall submit to Congress, within 30 days
after the waiver is made, a report containing the rationale
for the waiver and relevant information supporting the waiver
decision.
(d) Release of Information.--The Secretary of the Treasury,
in consultation with
[[Page H2242]]
the Director of the Office of Management and Budget, shall
make available to all executive agencies a standard form for
the authorization described in subsection (a).
(e) Revision of Regulations.--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 section.
SEC. 4. DISCLOSURE AND EVALUATION OF GRANT APPLICATIONS FROM
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 shall require each person applying for
a grant to submit with the grant application 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) Impact on Determination of Financial Stability.--The
head of any executive agency, in evaluating any application
for a grant offered by the agency, shall consider a
certification that the grant applicant has a seriously
delinquent tax debt to be definitive proof that the applicant
is high-risk and, if the applicant is awarded the grant,
shall take appropriate measures under guidelines issued by
the Office of Management and Budget for enhanced oversight of
high-risk grantees.
(c) Debarment.--
(1) Requirement.--Except as provided in paragraph (2), the
head of an executive agency shall initiate a suspension or
debarment proceeding against a person after receiving a grant
application from such person if--
(A) such application contains a certification (as required
under subsection (a)(1)) that such person has a seriously
delinquent tax debt; or
(B) the head of the agency receives information from the
Secretary of the Treasury (as authorized under subsection
(a)(2)) demonstrating that such a certification submitted by
such person is false.
(2) Waiver.--The head of an executive agency may waive
paragraph (1) with respect to a person based upon a written
finding of urgent and compelling circumstances significantly
affecting the interests of the United States. If the head of
an executive agency waives paragraph (1) for a person, the
head of the agency shall submit to Congress, within 30 days
after the waiver is made, a report containing the rationale
for the waiver and relevant information supporting the waiver
decision.
(d) Release of Information.--The Secretary of the Treasury,
in consultation with the Director of the Office of Management
and Budget, shall make available to all executive agencies a
standard form for the authorization described in subsection
(a).
(e) 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.
SEC. 5. DEFINITIONS AND SPECIAL RULES.
For purposes of this Act:
(1) Person.--
(A) In general.--The term ``person'' includes--
(i) an individual;
(ii) a partnership; and
(iii) a corporation.
(B) Exclusion.--The term ``person'' does not include an
individual seeking assistance through a grant entitlement
program.
(C) 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) has a seriously delinquent tax debt.
(D) 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) has a seriously delinquent tax debt.
(2) Executive agency.--The term ``executive agency'' has
the meaning given such term in section 133 of title 41,
United States Code.
(3) Seriously delinquent tax debt.--
(A) In general.--The term ``seriously delinquent tax debt''
means a Federal tax liability that--
(i) has been assessed by the Secretary of the Treasury
under the Internal Revenue Code of 1986, and
(ii) may be collected by the Secretary by levy or by a
proceeding in court.
(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;
(ii) a debt with respect to which a collection due process
hearing under section 6330 of such Code, or relief under
subsection (a), (b), or (f) of section 6015 of such Code, is
requested or pending;
(iii) a debt with respect to which a continuous levy has
been issued under section 6331 of such Code (or, in the case
of an applicant for employment, a debt with respect to which
the applicant agrees to be subject to such a levy); and
(iv) a debt with respect to which such a levy is released
under section 6343(a)(1)(D) of such Code.
SEC. 6. EFFECTIVE DATE.
This Act shall apply with respect to contracts and grants
awarded on or after the date occurring 270 days after the
date of the enactment of this Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Utah (Mr. Chaffetz) and the gentleman from Maryland (Mr. Cummings) each
will control 20 minutes.
The Chair recognizes the gentleman from Utah.
General Leave
Mr. CHAFFETZ. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days in which to revise and extend their remarks
and to include extraneous materials on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Utah?
There was no objection.
Mr. CHAFFETZ. Mr. Speaker, I yield myself such time as I may consume.
I appreciate being here today. We have done this in a good bipartisan
way. This is a good, strong bill. This bill has come under a previous
Congress and done quite well.
H.R. 1562 will increase tax compliance by Federal contractors and
grant recipients and deny contracts or grants to those with seriously
delinquent tax debt.
I am pleased to, again, present this bill to the House with
Representative Jackie Speier, like we did in the past. I also
appreciate the help of Representative John Carter in his cosponsorship.
The bill has a long history of bipartisan support, including from
then-Senator Obama and President Obama. While he cannot claim that he
has commented specifically on this exact bill, this bill before us was
something that was originally introduced by then-Senator Obama years
ago.
Five years ago, President Obama directed his administration to crack
down on tax cheats that are seeking government contracts. The President
said:
All across this country, there are people who meet their
obligations each and every day. You do your jobs. You support
your families. You pay the taxes you owe--because it's a
fundamental responsibility of citizenship.
The steps I'm directing today and the steps I'm calling on
Congress to take are just basic common sense. They're not
going to eliminate all of the waste or abuse in government
contracting in one fell swoop. Going forward, we'll also have
to do more to hold contractors more accountable not just for
paying taxes, but for following other laws as well.
I wholeheartedly and totally agree with the President's approach on
this.
On April 15, 2013, the House passed this very similar piece of
legislation by a vote of 407-0. Unfortunately, the Senate did not act.
Two years later, we are considering essentially the same bill today
with some very minor changes. For example, the definition of
``seriously delinquent tax debt'' now exempts individuals determined by
the IRS to be under economic hardship.
Let me remind my colleagues of what this bill does. H.R. 1562 denies
contracts or grants to those with seriously delinquent tax debt. The
bill requires contractors and potential grant recipients to certify
their tax status when submitting a proposal for a contract or a grant.
If the agency finds the contractor or grantee to have seriously
delinquent tax debt, then they would be referred for suspension or
debarment and would not be eligible for new awards.
There are exceptions in the bill for those that are trying to do the
right thing so they should not be covered under the definition of
``seriously delinquent tax debt.''
Such people, including those who are paying their back taxes through
debt installment plans or in the process of hearings with the IRS to
finalize a determination of their debt or experiencing economic
hardship as determined by the IRS, have exceptions.
In 2007, then-Senator Obama introduced legislation to address this
contractor accountability issue.
The bill before us today is simple. If contractors and those applying
for grants don't pay their taxes, they will not be eligible for
lucrative Federal contracts or grants.
[[Page H2243]]
At its core, this bill is about contractor and grant recipient
accountability with taxpayer dollars. Whether we like it or not, the
law requires we pay taxes. We expect the same from contractors and
grant recipients.
To give you some perspective on how much money we are talking about,
the Federal Government spends about $1 trillion annually on contracts
and grants, $1 trillion on just contracts and grants.
Most recently, in fiscal year 2014, the Federal Government spent $444
billion on contracts and $591 billion on grants. That is a lot of money
and demands a lot of tax compliance.
Over the years, the GAO--the Government Accountability Office--has
identified thousands of Federal contractors with substantial amounts of
unpaid taxes.
Here are a few examples given to us by the GAO. Tens of thousands of
recipients of Federal grant and direct assistance programs collectively
owed more than $790 million in Federal taxes as of September 2006.
Approximately 27,000 defense contractors owed about $3 billion;
33,000 civilian agency contractors owed roughly $3.3 billion, and 3,800
General Services Administration contractors owed about $1.4 billion in
unpaid taxes. We are talking about roughly $7.7 billion in uncollected
taxes.
At least 3,700 Recovery Act contract and grant recipients owed more
than $750 million in known unpaid Federal taxes while receiving over
$24 billion in Recovery Act funds. We have 3,700 contractors that
already owe $750 million; and what do we do? We gave them $24 billion
in additional contracts.
GAO also found contractors were not paying payroll taxes or owed
substantial property or other assets and still--still--didn't pay their
taxes.
For example, under a VA-HHS contract for healthcare-related services,
a contractor was paid more than $100,000 in Federal funds. The
contractor also had an unpaid tax debt of more than $18 million. The
owner was purchasing multimillion dollar properties and unrelated
luxury vehicles while not fully paying its payroll taxes. It goes on
and on.
The tax accountability problem has become a potential national
security problem. In 2014, the GAO found 83,000 Department of Defense
employees and contractors who held or were eligible for security
clearances had unpaid Federal tax debt totaling more than $730 million.
Now, not all contractors are tax cheats; the vast majority do pay
their taxes on time and in full. Those who fail to satisfy their tax
debt have a cost advantage over those who do pay their taxes.
You are competing for Federal contracts; you are competing for
grants. Some pay taxes; some don't. Who do you think is going to give
the lowest price and potentially get the next grant or contract? The
person who can undercut them because they don't pay their taxes--it is
just not fair.
Further, many fulfill dangerous missions, invest in cutting-edge
technology, and provide assistance for the poor and others in need.
Contractors who do not play by the rules should be held accountable.
Unfortunately, despite our past efforts, we haven't been able to get
this bill over the finish line. I hope the House will again support
this bill, as it did in the year 2013, and that the Senate will finally
bring this bill up and pass it as they should. Hopefully, this Congress
will be a bit different.
I urge my colleagues to support H.R. 1562.
Mr. Speaker, I reserve the balance of my time.
Mr. CUMMINGS. Mr. Speaker, I yield myself such time as I may consume.
I rise in strong support of H.R. 1562, the Contracting and Tax
Accountability Act.
This bill is nearly identical to a bill introduced in the last two
Congresses by Chairman Chaffetz and is very similar to legislation
reported by the Oversight Committee and passed by the House in the
110th Congress. I supported this legislation each time it has been
introduced, and I continue to support it today.
The Government Accountability Office has reported that government
contractors owed more than $5 billion in unpaid Federal taxes in 2004
and 2005. Unpaid taxes owed by contractors include payroll taxes--
amounts required to be withheld from employee wages--as well as
corporate income taxes.
GAO has also found that some contractors with unpaid tax debts are
repeat offenders that have failed to pay their taxes over many years,
including one case for almost 20 years.
This legislation will allow the Federal Government to make sure that
contractors seeking to do business with the Federal Government have
paid their taxes before they can receive a Federal contract.
The Federal acquisition regulation was revised in 2008 to require
contractors to certify that they do not owe a delinquent tax debt to
the Federal Government. This bill builds on that requirement by
providing Federal agencies the means to verify contractors' claims.
This legislation will also ensure that responsible contractors no
longer have to compete with tax delinquents.
I would just like to reiterate that I fully support the legislation.
It is imperative that we ensure that all contractors that are doing
business with the government have complied with their tax obligations.
I believe this bill does just that.
I urge all of our Members to support the legislation.
Mr. Speaker, I yield back the balance of my time.
Mr. CHAFFETZ. Mr. Speaker, I yield myself such time as I may consume.
I want to reiterate my pleasure in working with both sides of the
aisle on many, many pieces of legislation. We don't always agree, but I
think the tone and tenor that is happening in the Oversight and
Government Reform Committee is going in the right direction.
We have worked well with our staff. That wouldn't happen without the
leadership of the ranking member, Mr. Cummings, and I do appreciate it.
We have voted for this bill unanimously in the past. It is a new
Congress with new Members, but I would encourage this passage today.
I believe in the spirit in which the President and previously Senator
Obama has urged that Congress act on this issue. It is imperative that
we act on this issue today, hopeful, with passage, that we would get
the Senate to act as well. We are talking about billions of dollars of
taxpayer money. It is the fair and right thing to do. I urge the
passage 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 Utah (Mr. Chaffetz) that the House suspend the rules and
pass the bill, H.R. 1562.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. CHAFFETZ. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
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