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BRIEFS: Tax cheats got more than $24B in stimulus

A new study found that 3,700 businesses and nonprofit organizations that owed back taxes to the federal government received more than $24 billion in economic stimulus funds.
The number of tax-delinquent stimulus bill beneficiaries could be higher: The Government Accountability Office examined only 63,000 of the 80,000 recipients of stimulus contracts and grants. The 3,700 organizations it identified owed $757 million in back taxes.
Fifteen cases involve "abusive or potentially criminal activity," said GAO, which referred these cases to the Internal Revenue Service.
One construction firm owed $400,000 in back taxes, but received a contract worth more than $1 million. A nonprofit organization that owned more than $2 million in unpaid payroll taxes got more than $1 million in stimulus funds.
The federal government has established a program to catch tax-delinquent organizations that receive federal contracts, but many of the stimulus-funded contracts and grants were awarded by states and localities or by prime contractors.
The fact that "such a huge amount of the stimulus money went to known tax cheats should be a wakeup call for Congress," said Sen. Tom Coburn, R-Okla.
The federal government should "debar the worst of the tax cheats from the contractor work force," said Sen. Carl Levin, D-Mich.
"Many companies pay their taxes, so there's no reason for the government to deal with companies that don't," said Sen. Chuck Grassley, R-Iowa. "The businesses that should be excluded first from government business are those that have tax debts outstanding over several years and haven't done anything to try to pay off this debt."
One way to make sure government contractors pay at least some of their taxes is through tax withholding. In 2013, federal, state and local governments are scheduled to begin withholding 3 percent of their payments to contractors for goods and services. Small business groups complain that will cause cash-flow problems for honest companies that may end up not even owning this much in taxes. They're pushing for repeal of this contractor withholding requirement, but the new GAO report on stimulus tax cheats may make that effort more difficult.
For more information, see http:/levin.senate.gov
U.S. military veterans owned 2.4 million businesses - 9 percent of all firms nationwide - in 2007, according to the U.S. Census Bureau.
The numbers come from the bureau's Survey of Business Owners, which is conducted every five years. This is the first time the bureau has estimated the total number of veteran-owned businesses.
"Veteran-owned businesses make a valuable contribution to our economy, but until now, we did not have a benchmark that measured their role," said bureau Deputy Director Thomas Mesenbourg.
Veteran-owned businesses generated $1.2 trillion in revenue and employed 5.8 million people.
"Their impact on the economy is even greater when you add to that total those businesses owned equally by veterans and non-veterans," he said.
Broadening the count in that way increases the number of veteran-owned businesses to 3.7 million, or 13.5 percent of all U.S. businesses.
Nearly one-third of veteran-owned businesses operate in the professional, scientific and technical services or construction sectors.
For information, see www.census.gov
The federal government plans to streamline the approval process for visas sought by foreigners who plan to invest in new businesses in the U.S.
The EB-5 Immigrant Investor visa was created in 1990 as a way to "attract investors and entrepreneurs from around the world to create jobs in America," said Alejandro Mayorkas, director of U.S. Citizenship and Immigration Services. "We are dedicated to enhancing this program to ensure that it achieves that goal to the fullest extent possible."
Every year, 10,000 visas are available to prospective immigrants who plan to invest in new businesses that will create at least 10 jobs here. Applications require business plans and economic analyses showing that the program's criteria will be met.
The U.S. Citizenship and Immigration Services plans to expedite approvals of visas for projects that are fully developed and ready to be started. For an additional fee, these applications would be processed within 15 days.
The agency also plans to create specialized intake teams with expertise in economic analysis to work with applicants to quickly resolve any issues with their applications.
For information, see www.uscis.gov


