The Treasury Inspector General for Tax Administration found that almost 1200 IRS vendors, about 7% of all IRS vendors, had almost $600 million in combined federal tax debt!
Over half a billion dollars in unpaid taxes by those who are working for the agency in charge of tax collection is a rather surprising amount. It seems, however, that the problem is not even limited to those contractors that work with the IRS. The Government Accountability Office has found that thousands of contractors have been abusing the federal tax system.
While Congress and the executive branch have taken some steps to alleviate the problem, it seems that there is very little oversight or review of a contractor's tax compliance status after they've been awarded a contract. The inspector general has recommended to the IRS that they ought to perform annual tax checks on all IRS vendors, but it remains to be seen if the IRS can, or will, implement such a recommendation. Until then, it seems that some contractors are simply taking the free tax ride while they can.