Bailout Recipients Owe Millions in Unpaid Taxes, Rep. Lewis Says
More than a dozen companies that received federal bailout funds owe some $220 million in unpaid taxes, a senior House lawmaker said Thursday. House Ways and Means Oversight Subcommittee Chairman John Lewis , D-Ga., revealed the tax issues in remarks prepared for an oversight hearing on the Troubled Asset Relief Program enacted last fall. Lewis said his subcommittee looked at the tax records of the top 23 recipients of bailout money and found that 13 owed more than $220 million in unpaid taxes, with two companies owing more than $100 million each. The news delivered another public relations blow to the government’s financial industry bailout. Following hard on the heels of a public and political uproar about $165 million in retention bonuses paid out by American Insurance Group Inc., which has received $180 billion in bailout money, the tax debts are sure to bring a fresh wave of condemnation from lawmakers. But the problems may go beyond congressional outrage. According to Lewis, financial institutions must sign a contract stating they have no “material unpaid federal taxes” before receiving aid from the Treasury. “Treasury did not ask these banks and companies to turn over their tax records,” Lewis said. “Treasury relied on the signed statements when it agreed to invest billions of taxpayer dollars.” In his opening remarks, Lewis wondered openly whether recipients of the TARP money were “signing contracts knowing that they owe taxes but thinking they will not get caught?” “Did then-[Treasury Secretary Henry M. Paulson Jr. ] turn a blind eye?” Lewis asked. “Either way, this is shameful. . . . It is a disgrace.”