In response to reports that Blackwater USA “may have engaged in significant tax evasion,” Senator John Kerry called on the Small Business Administration (SBA) today to explain its potential involvement.
“The Bush Administration can’t hide Blackwater in the shadows anymore- it’s time to bring all of their dealings to light,” said Senator Kerry, Chairman of the Committee on Small Business and Entrepreneurship which oversees the SBA. “The SBA must explain to the American people what role they may have played in helping Blackwater avoid paying $31.8 million dollars in taxes. The SBA should not be involved in tax-related decisions.”
John Kerry requested any documentation the SBA may have provided to Blackwater in the past as, Blackwater pointed to an “official finding” by the Small Business Administration that allowed Blackwater’s workers to be counted as independent contractors rather than employees, as Blackwater defended their tax filings in a press release.
Below is the full text of the letter Senator Kerry sent to SBA Administrator Steven Preston:
October 23, 2007
The Honorable Steven C. Preston
U.S. Small Business Administration
409 Third Street, S.W.
Dear Administrator Preston:
Recently, there have been stories in the press which discuss House Committee on Oversight and Government Reform Chairman Waxman’s concerns that Blackwater LLC has evaded taxes by erroneously classifying workers as independent contractors instead of employees. Blackwater responded to Chairman Waxman’s inquiry with the following: “The U.S. Small Business Administration has determined in an official finding applying ‘the criteria used by the IRS for Federal income tax purpose,’ that ‘Blackwater security contractors are not employees.’’’
I am concerned that Blackwater is relying on a decision of the Small Business Administration for tax purposes. I am requesting that by November 2, 2007, you send me any determinations that the SBA has made concerning the classification of Blackwater’s workers and any other documents that would lead Blackwater to believe that their workers are not employees for tax purposes. Also, please clarify whether the Small Business Administration is making or has made employee versus independent contractor determinations for tax purposes.
Thank you for your timely attention to this matter.
Blackwater spokeswoman Anne Tyrrell said on Monday that Waxman was incorrect in contending that Blackwater personnel in Iraq and Afghanistan should not be treated as independent contractors but rather as employees for tax purposes.
Tyrrell said the government always has known of Blackwater’s relationship with its deployed personnel, adding that the SBA determined that for tax purposes, Blackwater security contractors are not employees.