Blackwater’s Tax-Fraud Explanation Needs ExplanationEarlier today, Blackwater’s Anne Tyrrell disputed an allegation from Rep. Henry Waxman (D-CA) that the company has committed tax fraud by classifying guards as independent contractors instead of employees with the following statement:
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.”
But according to the Small Business Administration, that’s not exactly true.
SBA spokeswoman Christine Mangi says that SBA did make such a determination — on November 2, 2006. But it was in reference to a dispute about who was a company employee on a project to provide services to Navy vessels in Guam, not Iraq. The ruling, she says, “was for this particular procurement,” not an SBA finding about Blackwater personnel in general, contrary to the suggestion of Blackwater’s response to Waxman.
Furthermore, Mangi explains, the IRS hardly has to defer to the SBA determination about who’s an independent contractor and who’s an employee. “Our findings are for the sole purposes of our small business contracting programs and, to the best of our knowledge, carry no legal weight outside of our programs,” she says.
