Tax Cheats Raked in Federal Stimulus Bucks

Thousands of businesses owing tax bills collected $24B
By Mary Papenfuss,  Newser User
Posted May 24, 2011 1:41 AM CDT
Updated May 24, 2011 5:30 AM CDT

(Newser) – Thousands of US companies that raked in federal stimulus money are tax cheats who owe the government millions. At least 3,700 government contractors and nonprofit organizations that received more than $24 billion in stimulus funds owed $757 million in back taxes while they were collecting their booty, according to a new report by the Government Accountability Office. One security firm collected $100,000 in stimulus funds while owing some $9 million in unpaid taxes, reports AP. A nonprofit collected $1 million, while owing $2 million. Under law, tax cheats are not barred from getting government contracts or grants. But pressure is mounting on businesses to pay up.

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"It is a matter of basic fairness that those who take government money should be required to pay their taxes like everyone else," said Oklahoma Republican Sen. Tom Coburn, a member of the Homeland Security and Governmental Affairs subcommittee that's holding a hearing on the report today. "That such a huge amount of the stimulus money went to known tax cheats should be a wakeup call for Congress." The 2009 stimulus package doled out some $821 billion to boost the economy, with $275 billion set aside for contracts and grants. Some 15 tax cheat cases uncovered by the GAO have been referred to the IRS for further investigation. (Read more stimulus funds stories.)

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