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Some rescued companies owe U.S. taxes: lawmaker

WASHINGTON (Reuters) - Some top recipients of U.S. bailout money owe the federal government more than $220 million in unpaid taxes, a U.S. lawmaker said on Thursday.

The flag flies atop the Treasury Department in Washington, November 18, 2008. REUTERS/Jim Bourg

Representative John Lewis, a Democrat from Georgia who heads the U.S. House of Representatives Ways and Means oversight subcommittee, said 13 bailed-out companies owe the federal government taxes. Two of them owe more than $100 million each.

Lewis said the firms, which he did not name, signed statements at the time of receiving federal aid stating that they owed no federal taxes.

“It is a disgrace. The American people are fed up... and they’re not going to take it anymore,” Lewis told a hearing to examine the oversight of the Troubled Asset Relief Program, or TARP.

Lewis said it raised further questions about the $700 billion program. “Are they signing contracts knowing that they owe taxes by thinking they will not get caught?” he asked.

Lewis’ subcommittee looked at the top 23 TARP recipients and found that more than half owe unpaid federal income taxes. One unidentified company owed $112.75 million in unpaid taxes from 2006 and 2005, according to the subcommittee’s research. Another company that received government funds owed $101.8 million dating back to before 2004.

The Government Accountability Office, the investigative arm of Congress, said the Internal Revenue Service had the enforcement tools needed to recoup unpaid taxes.

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“The IRS has a range of responsibilities under the current law to be able to pursue and obtain collection of delinquent taxes,” Gene Dodaro, the GAO’s acting comptroller general, told reporters after the hearing.

So far, more than $300 billion of TARP funds have been disbursed to financial services institutions including Citigroup, Bank of America and giant insurer American International Group.

AIG BONUSES

AIG is now being heavily criticized for accepting up to $180 billion in government funds and then handing out hefty bonuses.

TARP watchdog, Neil Barofsky, told the congressional panel that he plans to launch an audit examining federal monitoring and enforcement of executive compensation restrictions imposed on companies that have received government help such as AIG.

Barofsky, TARP’s inspector general, said his office will be looking closely to ensure bonuses to AIG employees are consistent with AIG’s legal or contractual obligations. “If there are any inconsistencies, we will act aggressively to recover taxpayers’ money,” Barofsky told the panel.

Barofsky said his office has already initiated two audits to bring more transparency to TARP. One audit is looking into the impact of lobbyists or other “outside influences” on the TARP application process and the second audit is looking at the process under which Bank of America received government help.

The Treasury Department funneled $25 billion into Bank of America as part of the capital injections. The government has also allocated $20 billion to the bank as part of a package in which the government agreed to share in losses on $118 billion of assets.

Reporting by Rachelle Younglai and Donna Smith: Editing by Tim Dobbyn

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