Kerry targets Blackwater over taxes

Sen. John Kerry (D-Mass.) is asking the leaders of the Senate Finance Committee to investigate the tax filings of security contractor Blackwater USA.

{mosads}In a letter to Sen. Max Baucus (D-Mont.), chairman of the Finance panel, and Sen. Chuck Grassley (R-Iowa), the committee’s ranking member, Kerry said he is “concerned that Blackwater is misclassifying its personnel for tax purposes.”

Earlier this week, House Oversight and Government Reform Committee Chairman Henry Waxman (D-Calif.) first raised the possibility that Blackwater’s decision to label the personnel it employs “independent contractors” may be a violation of tax laws.

In response, the company said that 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.’”

In addition, Blackwater lamented that Waxman raised the issue based on “a single letter from an IRS Field Office.”

However, Kerry, who chairs the Committee on Small Business and Entrepreneurship, said he asked SBA to provide documentation of its ruling with regard to Blackwater.

SBA Administrator Steven Preston responded that his agency’s “size determinations are solely for the purposes of ascertaining eligibility for our small business programs and have no applicability to tax liability matters.”

In the letter to the Finance leaders, Kerry said he is “troubled that Blackwater erroneously and inappropriately relied on an SBA size determination for the classification of its workers.”

He called on Baucus and Grassley to launch a probe of Blackwater “to determine if they are evading taxes due to the erroneous misclassification of workers.”

Kerry also wrote Blackwater Chairman Erik Prince, asking him to provide documents that would assist such an investigation.