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Federal Contractor Misconduct Database (FCMD)

The federal government routinely awards contracts to companies with histories of misconduct, including contract fraud and other violations. POGO believes that providing this website will help to improve contracting decisions and increase public knowledge of how the government spends billions of taxpayer dollars each year. Read more…

Employee Misclassification

In March 2007, the IRS issued a letter to Blackwater Security Consulting LLC ruling that the company misclassified one of its guards as an independent contractor and therefore would be responsible for withholding and paying employment taxes for the guard as required by federal law. Later in the year, after Blackwater personnel were involved in a fatal shooting in Iraq, Blackwater’s owner, Erik Prince, testified before the United States House of Representatives Committee on Oversight and Government Reform. Committee Chairman Rep. Henry Waxman’s subsequent discovery of the IRS letter and a nondisclosure agreement Blackwater allegedly used to keep the IRS matter secret led Waxman to issue a letter to Prince warning that his committee would investigate Blackwater for possible large-scale tax evasion and a corresponding cover-up. In March 2008, Rep. Waxman requested the IRS, the Small Business Administration, and the Department of Labor investigate Blackwater’s compliance with federal tax, small business and labor laws vis-a-vis its classification of security guards as independent contractors rather than employees.

Misconduct Type
Tax
Enforcement Agency
Treasury – IRS
Contracting Party
None
Court Type
Administrative
Disposition
Investigative Finding
Date of IRS Letter
3/30/2007
Contractors Involved Penalty
Total
Blackwater USA $0

Federal Contractor Misconduct Database