13 firms receiving bailout funds owe $220m in taxes
Oversight panel made discovery during review
WASHINGTON - At least 13 firms receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said yesterday.
Representative John Lewis, chairman of a House subcommittee overseeing the federal bailout, said two firms owe more than $100 million apiece. "This is shameful. It is a disgrace," the Georgia Democrat said. "We are going to get to the bottom of what is going on here."
The House Ways and Means subcommittee on oversight discovered the unpaid taxes in a review of tax records from 23 of the firms receiving the most money, Lewis said as he opened a hearing on the issue. The panel said it could not legally release the names of the companies owing taxes. It said one recipient had almost $113 million in unpaid federal income taxes from 2005 and 2006. A second recipient owed almost $102 million dating to before 2004. Another was behind $1.1 million in federal income taxes and $223,000 in federal employment taxes.
"If we looked at all 470 recipients, how much would they owe?" Lewis asked.
Lewis said the panel plans to review tax records from other firms receiving federal money, but he was unsure if it would look at every firm. "We're not done," he said.
Banks and other firms receiving federal money were required to sign contracts stating they had no unpaid taxes, Lewis said. But he said the Treasury Department did not ask them to turn over their tax records.
Neil Barofsky, special inspector general for the Troubled Asset Relief Program, told the hearing that if an executive signed a contract knowing that information about unpaid taxes was false, "that would potentially be a crime." He said his office will look to see if crimes were committed.
To date, the program has paid out more than $300 billion to private companies of the $700 billion approved by Congress last fall. No one from the Treasury Department appeared at yesterday's hearing. Lewis said he asked Treasury officials for a private briefing on their efforts to uncover unpaid taxes, as well as someone to testify. "They said no one was available," Lewis said.
The Internal Revenue Service "has every expectation that these amounts will be paid and is committed to collect every dollar of taxes that are owed," IRS spokesman Frank Keith said in a statement. "The IRS recognizes that those entities that receive taxpayer support have a special obligation to pay their taxes, and these taxpayer accounts will remain closely monitored by the IRS to ensure that the full amount of taxes due are paid."
Keith noted there could many reasons why a taxpayer has an unpaid balance. For example, taxpayers could be challenging their bills. "In and of itself, this does not signal any intent not to pay," Keith said.
Treasury Secretary Timothy Geithner is under fire on Capitol Hill for not preventing $165 million in bonuses from being paid to employees at troubled insurance giant AIG.
People will ask, said Representative Artur Davis, why there are "large companies getting taxpayer dollars, making false representations, and we can't even name them, much less make them pay the money back, much less prosecute them."
"Will they get their day on a billboard, hopefully?" the Alabama Democrat asked.
"Absolutely," said Barofsky. If someone lied, he said, "They need to be prosecuted."