14 July 2011
Federal grant award recipients should carefully review their own federal tax compliance and use vigilance when engaging subrecipients and contractors, based on recent Senate testimony from the Government Accountability Office (GAO). On May 24, 2011, a GAO representative testified before the Permanent Subcommittee on Investigations of the Senate Committee on Homeland Security and Governmental Affairs that thousands of contract and grant recipients under the American Recovery and Reinvestment Act of 2009 (ARRA) owe hundreds of millions of dollars in unpaid federal taxes. The testimony summarized GAO’s April 2011 report of its investigation of 15 entities that had collectively received some $35 million in ARRA funds despite federal tax delinquencies totaling roughly $40 million. GAO referred all 15 entities to the IRS for possible criminal investigation.