Next Scandal: Unpaid Corporate Taxes

As if extravagant executive bonuses weren't a big enough slap to taxpayers, it turns out that companies enjoying government bailouts owe more than $220 million in unpaid federal taxes.

The overdue taxes were uncovered when the House Ways and Means Committee reviewed tax records of the 23 biggest bailout recipients. Banks and other institutions which took federal funds were required to sign contracts stating they did not owe back federal taxes.

It could be a crime if an executive signed to accept federal funds while knowing his firm owed taxes, Neil Barofsky, inspector general for the TARP, told the hearing. He promised to look into whether there were any false representations made by any of the rescued companies.

John Lewis, Democrat of Georgia, who chairs the subcommittee overseeing the bailout, said 13 companies were in arrears on their taxes, and two of them, according to their tax records, owe more than $100 million each.

"This is shameful. It is a disgrace," said Lewis, who said the law barred release of the companies' names. But they included one which owed nearly $113 million in unpaid federal income taxes from 2005 and 2006. Another was $102 million in arrears from before 2004.

The sums include unpaid income taxes as well as unpaid employment taxes, the committee said.

Lewis pointed out that the Treasury Department did not ask companies for their tax records -- another highly embarrassing glitch in the decidedly rocky execution of the government's $300 billion rescue of ailing private companies.

And it comes on the day that federal lawmakers may vote on a bill to severely tax certain employee bonuses. The outrage over multimillion-dollar bonuses for executives at A.I.G.'s financial products division -- which pushed the giant insurer to the financial edge -- prompted a determined congressional effort to recoup as much of the $165 million as possible.

by Elizabeth Olson