Administration to toughen accountability on contractors' taxes

An executive order signed by President Obama directs the Treasury Department and the Office of Management and Budget to block delinquent contractors from receiving new work from federal agencies. The Internal Revenue Service will also review the accuracy of contractors' tax returns to ensure truthful reporting.

Obama called the steps "basic common sense," but said they alone will not eliminate all instances of contractor abuse.

"It is simply wrong for companies to take taxpayer dollars and not be taxpayers themselves," Obama said. "We need to insist on the same sense of responsibility in Washington that so many of you strive to uphold in your own lives, in your own families, and in your own businesses."

Obama cited Government Accountability Office reports of thousands of contracting companies that have received government work despite owing billions of dollars in federal taxes. A 2007 GAO study found that several contracting company owners counted expensive boats, cars, jewelry and multimillion-dollar properties among their assets, despite billions of dollars in unpaid taxes.