29–006 

113TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 113–35 

CONTRACTING AND TAX ACCOUNTABILITY ACT OF 2013 

APRIL 12, 2013.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. ISSA, from the Committee on Oversight and Government 

Reform, submitted the following 

R E P O R T 

[To accompany H.R. 882] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Oversight and Government Reform, to whom 

was referred the bill (H.R. 882) to prohibit the awarding of a contract or grant in excess of the simplified acquisition threshold unless the prospective contractor or grantee certifies in writing to the 

agency awarding the contract or grant that the contractor or grantee has no seriously delinquent tax debts, and for other purposes, 

having considered the same, report favorably thereon without 

amendment and recommend that the bill do pass. 

CONTENTS 

Page 

Committee Statement and Views ........................................................................... 2 

Section-by-Section .................................................................................................... 4 

Explanation of Amendments ................................................................................... 5 

Committee Consideration ........................................................................................ 5 

Application of Law to the Legislative Branch ....................................................... 5 

Statement of Oversight Findings and Recommendations of the Committee ...... 5 

Statement of General Performance Goals and Objectives .................................... 5 

Duplication of Federal Programs ............................................................................ 5 

Disclosure of Directed Rule Making ....................................................................... 5 

Federal Advisory Committee Act ............................................................................ 5 

Unfunded Mandate Statement ............................................................................... 6 

Earmark Identification ............................................................................................ 6 

Committee Estimate ................................................................................................ 6 

Budget Authority and Congressional Budget Office Cost Estimate .................... 6 


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1Source: USASpending.gov. 

2See GAO–07–742T; ‘‘TAX COMPLIANCE: Thousands of Federal Contractors Abuse the Federal Tax System’’; April 19, 2007. 3See GAO–08–31; ‘‘TAX COMPLIANCE: Federal Grant and Direct Assistance Recipients Who 

Abuse the Federal Tax System’’; November 2007. 

COMMITTEE STATEMENT AND VIEWS

PURPOSE AND SUMMARY

H.R. 882 is designed to ensure federal tax compliance for both 

government contractors and grantees. The federal government 

spends more than $1 trillion in contracts and grants annually (in 

fiscal year 2012, $514 billion in contracts and $536 billion in 

grants).1 It is important to ensure that the federal contracts and 

grants, funded by the taxpayers, are only awarded to responsible 

businesses and individuals. 

This bill requires that the head of any executive agency that 

issues a solicitation for a contract, or that offers a grant, in an 

amount greater than the simplified acquisition threshold (currently 

set at $150,000) require each person submitting a bid or proposal 

or grant application to: (1) certify that such person does not have 

a seriously delinquent tax debt; and (2) authorize the Secretary of 

the Treasury to disclose information limited to describing whether 

such person has a seriously delinquent tax debt. Affirmative selfcertification of a seriously delinquent tax debt is considered to be 

definitive proof that the person is not a responsible party or is a 

high-risk applicant for the pending contract or grant action. 

This bill requires contractors and grantees found to have a ‘‘seriously delinquent tax debt’’—whether they be identified via self-certification or by the Treasury verification—to be proposed for debarment consideration, unless waived by the agency head. 

‘‘Seriously delinquent tax debt’’ is defined in the bill as an outstanding tax debt for which a notice of lien has been filed in public 

records. Exempted from such definition are: (1) tax debts that are 

being paid in a timely manner under an approved installment 

agreement; and (2) debts for which a collection due process hearing 

has been requested or is pending. 

BACKGROUND AND NEED FOR LEGISLATION

The Government Accountability Office (GAO) has reported that 

thousands of government contractors had substantial amounts of 

unpaid federal taxes. Specifically, about 27,000 defense contractors, 

33,000 civilian agency contractors, and 3,800 General Services Administration contractors owed about $3 billion, $3.3 billion, and 

$1.4 billion in unpaid taxes, respectively.2 Many of the contractors 

have repeatedly failed to fulfill their tax obligations and have delinquencies that extend over multiple tax periods. GAO also reported 

that tens of thousands of recipients of federal grant and direct assistance programs collectively owed $790 million in federal taxes as 

of September 30, 2006.3 This figure, according to GAO, is likely 

substantially understated because GAO’s analysis excluded the 80 

percent of federal grants that are directly given to state and local 

governments which, in turn, disburse the grants to the ultimate recipients. Furthermore, in its April 2011 report, GAO found that at 

least 3,700 Recovery Act contract and grant recipients owed more 

than $750 million in known unpaid federal taxes while receiving 


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4See GAO–11–485; ‘‘RECOVERY ACT: Thousands of Recovery Act Contract and Grant Recipients Owe Hundreds of Millions in Federal Taxes’’; April 2011. 5Federal Acquisition Regulation 9.104–5, Certification regarding responsibility matters. 

6See generally ‘‘Memorandum for the Heads of Executive Departments and Agencies,’’ January 20, 2010. http://www.whitehouse.gov/the-press-office/memorandum-heads-executive-departments-and-agencies-1. 7See generally 26 U.S.C. § 6330. 8See http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Fresh-Start-Notice-ofFederal-Tax-Liens. 9See generally 41 U.S.C. § 113. 

over $24 billion in Recovery Act funds.4 This represented nearly 5 

percent of the contractors and grant recipients in the Recovery.gov 

database at the time. 

In response to the GAO reports and Congressional attention, in 

April 2008, the Federal Acquisition Regulation (FAR) was revised 

requiring, for any contracts over the simplified acquisition threshold; (1) offerors certify tax delinquency status; and (2) where an offeror indicates the existence of ‘‘an indictment, charge, conviction, 

or civil judgment, or Federal tax delinquency in an amount that exceeds $3,000’’ an agency suspension and debarment official is notified.5 The Administration, in January 2010, published a memorandum pushing for enhanced tax compliance requirements by 

tasking the Commissioner of Internal Revenue with conducting a 

review of self-certifications submitted pursuant to the 2008 FAR 

amendment.6 This bill would codify the FAR changes and provide 

a means to verify the contractor’s self-certification. 

The bill defines ‘‘seriously delinquent tax debt’’ as an outstanding 

tax debt for which a ‘‘notice of lien has been filed in public records.’’ 

The committee believes the bill sufficiently protects honest and 

responsible small businesses and individuals. Under the Internal 

Revenue Code, referenced in the bill (26 U.S.C. 6320), a written notice is provided within five business days after the filing of a notice 

of lien. This official and legally-sufficient notice is either: (1) given 

in person; (2) left at the dwelling or usual place of business of such 

person; or (3) sent by certified or registered mail to such person’s 

last known address. If a small business, for instance, missed this 

individual notice, they could check public records easily accessible 

to the general public. Similar notice requirements exist before any 

levy is made on any property or right to property.7

This bill provides broad exceptions for debts being paid in a timely manner, and debts in which a due process hearing has been requested or is pending. An alleged tax delinquent business or individual may request a hearing or appeal at the time of the notice 

of lien or levy. The committee is also aware that the Internal Revenue Service typically does not file notices of federal tax liens on 

amounts less than $10,000.8

Under the statute, a ‘‘responsible’’ contractor must possess ‘‘a 

satisfactory record of integrity and business ethics.’’ 9 The Committee believes that it is not unreasonable to ask that a responsible 

business, expecting to be awarded a contract or grant valued at 

more than $150,000 (i.e., current simplified acquisition threshold), 

be aware of its federal tax liability or an official written notice or 

public record against its property. 

LEGISLATIVE HISTORY

An identical version of this bill (H.R. 829), including an amendment offered by Rep. Speier, was adopted by the Oversight and 


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10S. 2519, ‘‘Contracting and Tax Accountability Act of 2007.’’ 11Federal Acquisition Regulation 9.406–3, Procedures. (c) Notice of proposal to debar. 

Government Reform Committee during the 112th Congress. Similar 

measures were introduced in the 110th and 111th Congresses, by 

then-Senator Barack Obama.10

SECTION-BY-SECTION

Section 1. Short title 

Provides the title ‘‘Contracting and Tax Accountability Act of 

2013.’’ 

Section 2. Governmental policy 

Provides the policy of the United States Government that no government contract or grant should be awarded to an individual or 

company with seriously delinquent federal tax debts. 

Section 3. Disclosure and evaluation of contract offers from delinquent federal debtors 

Requires that a solicitation for a contract larger than $150,000 

(i.e., the simplified acquisition threshold) require that each offeror 

submit: (1) a certification that the offeror does not have a ‘‘seriously delinquent tax debt’’; and (2) a waiver of privacy to allow 

verification of such self-certification using the Treasury tax data. 

Subsection (b) creates a presumption that the affirmative certification of ‘‘seriously delinquent tax debt’’ be definitive proof that the 

offeror is not a responsible source to do business with the federal 

government. 

Subsection (c) requires that an offeror with a ‘‘seriously delinquent tax debt,’’ deduced either by self-certification or by Treasury 

verification, be referred to the agency’s suspension and debarment 

office for a formal adjudication, unless the head of an agency executes a written waiver. In case of a waiver, the head of the agency 

is required to notify Congress within 30 days with the relevant information. The term ‘‘propose’’ in this bill has a meaning distinct 

from what is called ‘‘a notice of proposed debarment’’ in the FAR.11

Section 4. Disclosure and evaluation of grant applications from delinquent federal debtors 

Provides reciprocal requirements for grants, except that instead 

of banning grantees with a seriously delinquent tax debt from receiving a grant, they are instead placed in the ‘‘high risk’’ category, 

triggering enhanced reporting and oversight. 

Section 5. Definitions and special rules 

The term ‘‘seriously delinquent tax debt’’ is defined as ‘‘an outstanding tax debt under the Internal Revenue Code of 1986 for 

which a notice of lien has been filed in public records.’’ Exceptions 

are provided for debts being paid in a timely manner and debts in 

which a due process hearing has been requested or is pending. Also 

exempts a grant entitlement program applicant. 

Section 6. Effective date 

Applies to contracts and grants awarded on or after the date occurring 270 days after enactment of this Act. 


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EXPLANATION OF AMENDMENTS

No amendments were offered to H.R. 882. 

COMMITTEE CONSIDERATION

On March 20, 2013, the Committee met in open session and ordered reported favorably the bill, H.R. 882, by voice vote, a quorum 

being present. 

APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

Section 102(b)(3) of Public Law 104–1 requires a description of 

the application of this bill to the legislative branch where the bill 

relates to the terms and conditions of employment or access to public services and accommodations. This bill ensures federal tax compliance for both government contractors and grantees. As such this 

bill does not relate to employment or access to public services and 

accommodations. 

STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF

THE COMMITTEE

In compliance with clause 3(c)(1) of rule XIII and clause 2(b)(1) 

of rule X of the Rules of the House of Representatives, the Committee’s oversight findings and recommendations are reflected in the 

descriptive portions of this report. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

In accordance with clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee’s performance goals and 

objectives are reflected in the descriptive portions of this report. 

DUPLICATION OF FEDERAL PROGRAMS

No provision of H.R. 882 establishes or reauthorizes a program 

of the Federal Government known to be duplicative of another Federal program, a program that was included in any report from the 

Government Accountability Office to Congress pursuant to section 

21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULE MAKINGS

Section 3(e) requires that the Federal Acquisition Regulation be 

revised to incorporate the requirements of the bill within 270 days 

of date of enactment. 

Section 4(e) requires that the Director of the Office of Management and Budget revise regulations governing grants to incorporate the requirements of the bill within 270 days of date of enactment. 

FEDERAL ADVISORY COMMITTEE ACT

The Committee finds that the legislation does not establish or 

authorize the establishment of an advisory committee within the 

definition of 5 U.S.C. App., Section 5(b). 


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UNFUNDED MANDATE STATEMENT

Section 423 of the Congressional Budget and Impoundment Control Act (as amended by Section 101(a)(2) of the Unfunded Mandate 

Reform Act, P.L. 104–4) requires a statement as to whether the 

provisions of the reported include unfunded mandates. In compliance with this requirement the Committee has received a letter 

from the Congressional Budget Office included herein. 

EARMARK IDENTIFICATION

H.R. 882 does not include any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of Rule 

XXI. 

COMMITTEE ESTIMATE

Clause 3(d)(2) of rule XIII of the Rules of the House of Representatives requires an estimate and a comparison by the Committee of the costs that would be incurred in carrying out H.R. 882. 

However, clause 3(d)(3)(B) of that rule provides that this requirement does not apply when the Committee has included in its report 

a timely submitted cost estimate of the bill prepared by the Director of the Congressional Budget Office under section 402 of the 

Congressional Budget Act. 

BUDGET AUTHORITY AND CONGRESSIONAL BUDGET OFFICE COST

ESTIMATE

With respect to the requirements of clause 3(c)(2) of rule XIII of 

the Rules of the House of Representatives and section 308(a) of the 

Congressional Budget Act of 1974 and with respect to requirements 

of clause 3(c)(3) of rule XIII of the Rules of the House of Representatives and section 402 of the Congressional Budget Act of 1974, the 

Committee has received the following cost estimate for H.R. 882 

from the Director of Congressional Budget Office: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, April 11, 2013. 

Hon. DARRELL ISSA, 

Chairman, Committee on Oversight and Government Reform, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 882, the Contracting and 

Tax Accountability Act of 2013. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Matthew Pickford. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 882—Contracting and Tax Accountability Act of 2013 

H.R. 882 would prohibit federal agencies from awarding contracts or grants to persons or companies that have seriously delinquent tax debt. The legislation defines seriously delinquent as outstanding tax debt to the federal government for which a public lien 


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has been filed. Tax debt that is being paid in a timely manner, or 

is part of a requested or pending collection-due-process hearing, 

would not be considered seriously delinquent. Under the bill, certain contractors and grantees that receive federal funds would have 

to certify that they do not have such tax debt, and the Internal 

Revenue Service (IRS) would be authorized to confirm or refute 

those claims on behalf of the federal agencies involved. 

Based on information from the Office of Management and Budget, the Internal Revenue Service, and the staff of the Joint Committee on Taxation (JCT), CBO estimates that implementing H.R. 

882 would increase administrative costs governmentwide by less 

than $500,000 annually, assuming the availability of appropriated 

funds. The bill could affect direct spending by agencies not funded 

through annual appropriations; therefore, pay-as-you-go procedures 

apply. CBO estimates that any net increase in direct spending by 

such agencies would not be significant. JCT estimates that enacting the bill would have a negligible effect on revenues. 

Most of the provisions of the bill would expand current law and 

practices. The federal government currently collects information on 

contractors and grant recipients through a variety of databases. In 

addition, the IRS has a database regarding tax liens and already 

provides tax-debt information to various Treasury Department programs through which certain federal payments are withheld or reduced in order to collect delinquent tax and nontax debt owed to 

federal agencies. Consequently, CBO estimates that implementing 

this bill will would not significantly increase administrative costs 

to federal agencies. 

H.R. 882 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Matthew Pickford. 

This estimate was approved by Theresa Gullo, Deputy Assistant 

Director for Budget Analysis. 

Æ 


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