Delinquent Taxes & Federal Government Contracts: Three Rules to Know

Delinquent federal taxes can create serious consequences for government contractors beyond standard IRS collection efforts. Federal contractors are often required to certify that they do not have unresolved unpaid federal tax liabilities and that all required tax returns have been filed. These certifications appear in several FAR clauses, and inaccurate or false certifications can result in proposal rejection, contract eligibility issues, or even exposure to False Claims Act liability.

Tax issues involving company leadership can also become a problem. Certain federal contracting rules require contractors to disclose whether company principals—such as owners, officers, partners, or senior managers—have unresolved delinquent federal taxes. That means personal tax liabilities can potentially affect the company’s ability to compete for federal contracts.

In addition, unpaid federal tax obligations may impact eligibility for SBA certification programs, including SDVOSB and VOSB certifications. SBA regulations allow the agency to deny or revoke certifications when a business or its principals owe significant financial obligations to the federal government.

For government contractors, tax compliance is more than a financial issue—it is a compliance and eligibility issue that can directly affect contract opportunities, certifications, and overall business operations. Read the full article to better understand these important FAR and SBA rules and how they may apply to your business.