On April 15, 2013, otherwise known as “Tax Day,” the U.S. House of Representatives unanimously passed House Resolution 882, titled the “Contracting and Tax Accountability Act of 2013.” The bill would prohibit the government from awarding contracts and grants in excess of the simplified acquisition threshold unless the bidder certifies in writing that the individual or company does not have any “seriously delinquent tax debts.” Importantly, rather than focus on tax debts of the company, the certification focuses on the tax debts of the individuals running the company.
The legislation prohibits awards to a “person with a seriously delinquent tax debt.” A corporation violates this standard if an officer or shareholder with a controlling interest has an outstanding tax debt for which a notice of lien has been filed in accordance with Section 6323 of the Internal Revenue Code. A tax debt will not be considered “seriously delinquent” if it is being paid in a timely manner pursuant to an agreement with the IRS or a collection due process hearing is requested or pending. There is a similar provision for partnerships.
Last year, the House passed a similar bill that would have made any individual with a seriously delinquent tax debt ineligible for federal employment or to continue serving as a federal employee, but the bill was never passed by the Senate. This time the representatives focused on the federal contractor community. If the bill passes, contractors will need to develop policies and notice and reporting structures so they identify and address potentially noncompliant officers and shareholders.
The full text can be found here.