The General Services Administration is now coming under scrutiny for offering government contractors a tax deduction in exchange for giving the agency 19 percent of the money from the tax break.
The agency is already under fire for the spending at a lavish employee conference in Las Vegas. The tax break involved making federal buildings more energy efficient. Section 179D of the Tax Code offers energy tax credits to building owners who install energy efficient lighting, heating and cooling systems.
The GSA told the Associated Press that no federal contractors ever took part in the program and no money was ever paid to the GSA, and that it was discontinued. The GSA said the practice of offering the tax break in exchange for a portion of it was legal and was a way for the agency to invest in other energy efficiency projects.
Lawmakers plan to investigate whether the agency broke the law and if other federal agencies are also offering tax breaks in exchange for a portion of the proceeds. On Thursday, House Ways and Means Subcommittee on Oversight Chairman Charles Boustany, Jr., R-La., sent a letter to the GSA and 15 other departments and one agency across the federal government seeking information about the potential abuse of the Energy Efficient Commercial Buildings Deduction, also known as the “179D Deduction.” Documentation recently obtained by the Ways and Means Committee suggests that the GSA may be using the deduction to secure kickbacks from contractors by requiring the contractor to write checks payable to GSA for 19 percent of the value of the deduction.
“The action by the GSA raises a number of serious questions about whether this particular tax deduction is being abused,” Boustany said in a statement. “Requiring a cash payment in exchange for a tax deduction is a kickback, pure and simple. We must ensure that this tax deduction is being used for its intended purpose and not being sold to line some government slush fund. Given the wide range of abuse of taxpayer dollars being used for everything from fortune tellers to clowns to spaying pets, it is clear that strong and vigorous oversight is necessary to ensure that taxpayer dollars are being protected.”
The departments and agencies are being asked to provide information to Boustany’s subcommittee by May 18 on a range of areas including: copies of all letters sent by the government to contractors or other entities regarding the 179D deduction; the total amount of deductions a government entity has allocated, and a detailed breakdown of the contractors or other entities receiving allocations, including the amount of the deductions; information about whether the government entity requested or received a percentage of the deduction from the contractor or other entities to whom the deduction was allocated; and how the government entity used these funds, including information detailing the accounts the funds were deposited into and by whom.
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