Treasury IG: Firms getting Wall Street bailout money nearly pay off $530M in back taxes

WASHINGTON (AP) — Companies receiving money from the government's Wall Street bailout have repaid nearly all the $531 million in unpaid federal taxes they owed when they entered the program, a government investigator reported Monday.

Tax records were reviewed for 558 companies that received money from the Troubled Asset Relief Program, and 130 owed back taxes when they entered the program in 2008, said the report by J. Russell George, the Treasury Department's inspector general for tax administration. Five companies accounted for $227 million in unpaid taxes.

About 97 percent of the unpaid taxes — all but $18 million — were paid by December 2009, the report said.

"All recipients of federal funds, including TARP participants, must meet their Federal tax obligations," George said.

A House committee first disclosed in March 2009 that some firms receiving bailout money owed unpaid taxes. Monday's report revealed the magnitude of unpaid taxes, as well as firms' efforts to pay them. The report does not name any companies because tax records are confidential by law.

"It is important for taxpayers to know that the Congress and the administration are working together to oversee the TARP recipients," said Rep. John Lewis, D-Ga., chairman of the House Ways and Means oversight subcommittee, which first disclosed the issue. "To maintain public confidence, we must ensure that those who benefit from federal programs timely pay their fair share of taxes."

The Wall Street bailout was enacted under former President George W. Bush in 2008, when the economy was on the brink of recession. The bailout has become unpopular among many voters, though officials argued it was necessary for the nation to avoid financial collapse.

Under TARP, the government provided companies with about $384 billion. The Treasury Department reported last week that $194 billion, or slightly more than half, had been repaid.