Video: President Obama cracks down

updated 1/22/2010 12:25:22 PM ET 2010-01-22T17:25:22

President Barack Obama on Wednesday ordered a new crackdown on federal contractors who don't pay their taxes.

Obama signed an executive order telling federal agency chiefs to take steps to bar those companies from receiving new government contracts. The order also directed the IRS to review contractor filings to make sure companies are not lying about the taxes they've paid.

Obama said the practice is inefficient, wasteful and, above all, wrong.

"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."

The White House said the move is part of the president's effort to restructure government contracting to eliminate waste and abuse.

That effort has included measures to end no-bid contracts and to crack down on what the administration deems improper payments. Administration officials estimate the measures saved as much as $100 billion last year.

Obama said studies by the Government Accountability Office have estimated that the U.S. is owed more than $5 billion in unpaid taxes by thousands of companies that are being awarded government contracts.

He cited the example of one company owner who was paid more than $1 million as a defense contractor while owing the government more than $1 million in taxes. But instead of paying his taxes, Obama said that individual bought a boat, cars and a home overseas.

Obama asked Congress to give the administration tools to stop this kind of abuse, including passing legislation to allow the IRS to share tax data with contracting officials to help catch tax scofflaws.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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