Pentagon defends approach to tax-delinquent contractors

Frank Kendall is acting Defense undersecretary for acquisitions. Frank Kendall is acting Defense undersecretary for acquisitions. AP photo

The Defense Department’s current procedures for deciding whether to crack down on contractors that owe back taxes is working as intended, Frank Kendall, acting Defense undersecretary for acquisitions, logistics and technology, said in a newly released response to inquiries from lawmakers.

Sens. Tom Carper, D-Del., and Tom Coburn, R-Okla., wrote to Kendall asking if the Pentagon was withholding any payments from Leonie Industries -- the largest U.S. contractor working in Afghanistan- - after USAToday reported in February that the firm owed about $4 million in back taxes.

Leonie Industries, thorough its attorney, said it’s already working with the Internal Revenue Service to resolve the cash-flow issues.

In a letter dated April 4, Kendall wrote “while the department has a robust and effective process of collecting contractor tax debt, it can only be executed when the Department of the Treasury, through the Internal Revenue Service, notifies the Defense Finance and Accounting Service of a valid debt for which DFAS can offset against payments due the company. IRS has not notified DFAS of a tax delinquency on the part of Leonie Industries or its owners.” Hence no payments due to the company have been withheld.

Kendall also confirmed that the Army had ascertained that Leonie Industries had entered into an agreement with the IRS on a payment plan.

Carper said in a statement on Monday: “While I welcome the news that the IRS and the contractor have established a plan for the contractor to repay their delinquent taxes, there is still much work to be done when it comes to overseeing government contractors and holding them accountable for tax delinquency.”

Carper said the IRS must work more closely with Defense to examine the tax status of government contractors.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download

When you download a report, your information may be shared with the underwriters of that document.