Your taxpayer dollars at work ... building red tape

As if the government doesn't get a bad enough rap -- admittedly, frequently deserved -- now there's this. The Federal Timesjust reported on a new survey that just came out on Tuesday, which suggests that contractors don't profit from government work as much as is commonly thought. The survey was conducted by Grant Thornton, who isn't some suave movie actor or a relative to Cary Grant. Just in case you thought so. Obviously, I didn't. I knew from the start that it was a huge accounting/consulting firm. Really.

So, anyway, 69% of government contractors last year made profits of less than 10 percent from their government business, and seven percent of those contractors actually made no profits. Only 12 percent of the more than 100 government contractors queried brought in more than 15 percent from their government contracts in fiscal 2006.

And some of the reasons companies aren't making profits? Surprisingly, there's an awful lot of red tape involved when working with the government. I, for one, as Captain Renault in Casablanca famously said, "Shocked, shocked to find that gambling is going on here." OK, the quote doesn't match up completely to this example.


Or maybe it does. After all, it turns out it's kind of a gamble when you work for the government. As the Federal Times explains, the contractors are often asked to use cost-reimbursable contracts, which require more audits, reporting and investigations than commercially styled fixed-price contracts. (Of course, to be fair, when contractors rip off the government, we naturally and rightfully complain, and that leads to contracts like this.)

But then there's the simple fact that when a new governor, mayor, president or what have you is elected, or simply the ever-evolving budgetary agenda changes, programs can be eliminated, suddenly making the work that you or your business was doing for the government -- well -- obsolete. That has to be devastating, though, I guess on the bright side, as a taxpayer, you might be happy to be saving the money.

(I'm not going to get audited for writing this, am I?)

Geoff Williams is a business journalist, primarily for Entrepreneur magazine, and is the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale, 2007).

When to Use Tax Form 4137: Tax on Unreported Tip Income

You may need to use IRS Form 4137 to calculateany additional tax you may owe on unreported tip income.

Read More

Brought to you by TurboTax.com

Tax Tips for Freelance Writers and Self-Published Authors

If you earn money selling your words to websites and other publishers, the Internal Revenue Service will likely say you’re a small business owner. Freelance income is self-employment income, and so are any royalties you receive for that book you published or self-published. That can be a good thing, because the self-employed are privy to some tax perks that employees don’t usually receive.

Read More

Brought to you by TurboTax.com

Will the IRS Keep My Refund if I Didn't File My Taxes Last Year?

If you're concerned about your tax refund being held by the IRS because of unfiled returns, you have a couple of options to reduce or eliminate any extra wait for your current-year refund.

Read More

Brought to you by TurboTax.com

Guide to Unemployment and Taxes

The IRS considers unemployment compensation to be taxable income—which you must report on your federal tax return. State unemployment divisions issue an IRS Form 1099-G to each individual who receives unemployment benefits during the year.

Read More

Brought to you by TurboTax.com
Read Full Story