13 of 23 TARP Recipients Owe Unpaid Federal Taxes
MARCH 19, 2009, 11:51 A.M. ET
Lawmaker: TARP Companies Owe Back Taxes
By MEENA THIRUVENGADAM
WASHINGTON — Of the 23 top recipients of government capital through the Troubled Asset Relief Program, 13 owe unpaid federal taxes, a U.S. House oversight committee reported Thursday.
House Ways and Means Subcommittee on Oversight Chairman John Lewis (D., Ga.) said the companies owe a combined more than $220 million in unpaid federal taxes. Of those companies, two owe more than $100 million each.
Rep. Lewis accused the Treasury of engaging in poor documentation practices by failing to ask companies to prove they didn’t owe federal taxes, a requirement for government aid.
“Treasury did not ask these banks and companies to turn over their tax records,” Rep. Lewis said. “Treasury relied on the signed statements when it agreed to invest billions of taxpayer dollars.”
The unpaid tax debts include both unpaid income taxes and unpaid employment taxes, according to the Ways and Means Committee.
Government aid to ailing companies is under increased scrutiny after new information emerged to show the American International Group Inc. — recipient of more than $170 billion in federal aid — last week paid $165 million in bonuses to employees in a division responsible for much of its losses.
In addition to AIG, Treasury so far has provided billions in aid to a range of banks, financing companies and two of the nation’s largest automakers under the $700 billion bailout program Congress approved last fall.
It is unclear whether the Internal Revenue Service has taken any steps to recover unpaid tax money from the TARP recipients. However two of the programs watchdogs were previously unaware of the debts’ existence.
Still, the “IRS has the tools available to collect that money,” said Gene Dodaro, acting comptroller general of the U.S. told congressional leaders.
Write to Meena Thiruvengadam at meena.thiruvengadam@dowjones.com