Cash for tax cheats

The Washington Times Weekly - - Commentary - Michelle Malkin

When Pres­i­dent Obama signed the tril­lion-dol­lar stim­u­lus law in 2009, he pro­claimed that he was “keep­ing the Amer­i­can dream alive in our time.” The stim­u­la­tor-inchief failed to men­tion that bil­lions would be spent keep­ing Amer­i­can tax scam­mers afloat on our dime.

At a con­gres­sional hear­ing on May 24, fed­eral au­di­tors re­ported on the lat­est porku­lus spend­ing gone wild. Ac­cord­ing to a new Gen­eral Ac­count­ing Of­fice au­dit con­ducted over the past year, nearly 4,000 stim­u­lus re­cip­i­ents re­ceived $24 bil­lion in Re­cov­ery Act funds, while ow­ing more than $750 mil­lion in un­paid cor­po­rate, pay­roll and other taxes. Among the tax­cheat­ing fed­eral con­trac­tors and grant win­ners who raked in stim­u­lus bucks, the Se­nate Per­ma­nent Sub­com­mit­tee on In­ves­ti­ga­tions found:

Two so­cial ser­vices groups with nearly $3 mil­lion in un­paid taxes each re­ceived more than $1 mil­lion in stim­u­lus awards.

One non­profit or­ga­ni­za­tion owed more than $2 mil­lion from years of un­paid pay­roll taxes, while at the same time its CEO made nu­mer­ous trips to a casino. The group was awarded more than $1 mil­lion in stim­u­lus funds.

One en­gi­neer­ing ser­vices firm had a $6 mil­lion delin­quent tax debt and was called by the IRS an “ex­treme case of non­com­pli­ance,” yet won a con­tract worth more than $100,000.

A mu­nic­i­pal­ity with a his­tory of late tax fil­ings and five pe­ri­ods of un­paid pay­roll taxes worth $1 mil­lion re­ceived $100,000 in stim­u­lus money.

A health care com­pany that owes more than $1 mil­lion in back taxes and has had fed­eral IRS liens filed against it since the late 1990s re­ceived $100,000 in stim­u­lus funds.

One se­cu­rity firm owed $9 mil­lion and was re­peat­edly cited not only for be­ing un­co­op­er­a­tive with the IRS, but also had been nabbed with fre­quent la­bor vi­o­la­tions. It also re­ceived a stim­u­lus con­tract worth more than $100,000.

And this is just the tip of the Cash for Tax Cheats ice­berg. The GAO ac­knowl­edged in its re­port that “the es­ti­mated amount of known un­paid fed­eral taxes we iden­ti­fied is likely un­der­stated” be­cause of ram­pant un­der­re­port­ing of in­come and be­cause the anal­y­sis did “not in­clude Re­cov­ery Act con­tract and grant re­cip­i­ents who are non­com­pli­ant with or not sub­ject to Re­cov­ery Act re­port­ing re­quire­ments.”

The of­fi­cial re­sponse of the Obama ad­min­is­tra­tion’s stim­u­lus over­sight board? First, the Re­cov­ery Accountability and Trans­parency Board pat­ted it­self on the back for its trans­parency. Sec­ond, the panel dodged re­spon­si­bil­ity by sheep­ishly point­ing out that “fed­eral law does not pro­hibit tax delin­quents from get­ting gov­ern­ment con­tracts or grants.”

The Trea­sury Depart­ment in­spec­tor gen­eral found that the tax po­lice have failed to pre­vent fraud in the stim­u­lus law’s en­ergy tax credit pro­gram. Some $6 bil­lion in stim­u­lus en­ergy cred­its for home­own­ers have been claimed, but the in­spec­tor gen­eral’s au­dit found that 30 per­cent of credit-claimers had no record of home­own­er­ship. “I am trou­bled by the IRS’s con­tin­ued fail­ure to de­velop ap­pro­pri­ate ver­i­fi­ca­tion meth­ods for dis­tribut­ing Re­cov­ery Act cred­its,” the Trea­sury In­spec­tor watch­dog said. More­over, when the IRS wasn’t fall­ing down on its job polic­ing out­side fraud, its own work­ers were com­mit­ting their own stim­u­lus fraud, by cheat­ing the sys­tem and claim­ing a first-time home­buyer tax credit in­cluded in the 2008 and 2009 eco­nomic stim­u­lus pack­ages. At least 128 IRS em­ploy­ees claimed the credit, ac­cord­ing to a re­cent Trea­sury Depart­ment au­dit, yet weren’t first-time buy­ers or vi­o­lated other ba­sic el­i­gi­bil­ity cri­te­ria.

Ok­la­homa GOP Sen. Tom Coburn, who has doggedly tracked stim­u­lus waste from Day One, said, “That such a huge amount of the stim­u­lus money went to known tax cheats should be a wake-up call for Congress.” It should be about the 20th wake-up call by now. Obama’s no­to­ri­ous slush fund has re­dis­tributed wealth to prison in­mates, flaky re­search- ers, so­cial jus­tice boon­dog­gles, in­fra­struc­ture to nowhere, for­eign com­pa­nies, dead peo­ple and ghost con­gres­sional dis­tricts, not to men­tion $20 mil­lion in chump change to pay for cam­paign-style stim­u­lus-hyp­ing road signs across the coun­try em­bla­zoned with the shov­el­ready logo.

And for what? Un­em­ploy­ment re­mains near dou­ble-dig­its. Obama eco­nomic ad­vis­ers Christina Romer and Jared Bern­stein in­fa­mously vowed the stim­u­lus would stay be­low 8 per­cent. High­way jobs have not ma­te­ri­al­ized. In­vestor’s Busi­ness Daily notes that a new study by econ­o­mists Ti­mothy Con­ley of the Univer­sity of West­ern On­tario and Bill Du­por of Ohio State “found that de­spite the in­flux of all that fed­eral money, high­way con­struc­tion jobs ac­tu­ally plunged by nearly 70,000 be­tween 2008 and 2010.” In­deed, the re­searchers found that the stim­u­lus ac­tu­ally “de­stroyed or fore­stalled” one mil­lion pri­vate sec­tor jobs by crowd­ing them out with make­work pub­lic jobs and pro­grams.

Michelle Malkin is a na­tion­ally syn­di­cated colum­nist.

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