[Congressional Record (Bound Edition), Volume 161 (2015), Part 4]
[House]
[Pages 5059-5061]
[From the U.S. 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 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--

[[Page 5060]]

       (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.
  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

[[Page 5061]]

$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.

                          ____________________