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).

Getting Divorced

If you're going through a divorce, taxes may be the last thing on your mind, so we're here to help. We've got tips for you on which filing status to choose after the divorce, who can claim the exemptions for the kids, and how payments to an ex-spouse are treated for tax purposes.

Read More

Brought to you by TurboTax.com

5 Tax Tips for Single Parents

Filing taxes as a single parent requires coordination between you and your ex-spouse or partner. Usually the custodial parent claims the child as a dependent, but there are exceptions. A single parent is allowed to claim applicable deductions and exemptions for each qualifying child. Even though you claim your child as a dependent, she may still have to file her own tax return if she has income, such as from an after-school job.

Read More

Brought to you by TurboTax.com

7 Requirements for the Child Tax Credit

The Child Tax Credit can reduce your tax bill by as much as $1,000 per child, if you meet all seven requirements: 1. age, 2. relationship, 3. support, 4. dependent status, 5. citizenship, 6. length of residency and 7. family income. You and/or your child must pass all seven to claim this tax credit.

Read More

Brought to you by TurboTax.com

Guide to Filing Taxes as Head of Household

The IRS has provided a series of guidelines to help taxpayers understand whether or not they qualify to file as head of household.

Read More

Brought to you by TurboTax.com
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.