Henry Waxman Accuses Blackwater of Tax Evasion

October 22, 2007 · Filed Under Crime

The Democratic chairman of a House watchdog committee said Monday that Blackwater USA violated tax laws and may have defrauded the government of millions of dollars, a charge the embattled security firm said is groundless.

Henry Waxman released a March letter from the Internal Revenue Service that states the company’s classification of a security guard as an independent contractor, instead of company personnel, was “without merit.”

Waxman has been investigating Blackwater’s business dealings for several weeks, including whether the State Department unfairly awarded Blackwater a noncompetitive contract and if its guards took control of two Iraqi military aircraft without permission.

The primary factor in determining whether a worker is an employee or independent contractor is the degree of control the business has over its worker. Incorrectly classifying a worker could mean steep penalties for the company, including a $25,000 penalty if the IRS determines an appeal is frivolous or groundless.

Ever since Democrats took control of Congress they have been on a vendetta to take down Blackwater, so it’s no surprise that Waxman would level politically motivated charges.