A House Ways and Means subcommittee is investigating whether the General Service Administration is using a tax deduction to "secure kickbacks" from contractors who help make government buildings more energy-efficient.
House Ways and Means Oversight Subcommittee Chairman Charles Boustany, R-La., sent a letter to 15 government departments and the Environmental Protection Agency to determine whether the practice is widespread or confined to the troubled GSA.
Boustany said the GSA, which oversees the federal government's expansive real estate holdings, has been requiring contractors who claim the energy-efficiency tax deduction to write a check, payable to the GSA, for 19 percent of the deduction's value.
"The action by the GSA raises a number of serious questions about whether this particular tax deduction is being abused," Boustany said Thursday. "Requiring a cash payment in exchange for a tax deduction is a kickback, pure and simple."
The GSA has been under fire in recent weeks after it was revealed one of its top administrators, now on paid leave, had been spending hundreds of thousands of dollars on lavish trips and conferences for himself and other agency employees.
GSA Regional Commissioner Jeff Neely went to Hawaii three times, toured the Pacific Rim and planed a $823,000 conference in Las Vegas for 300 colleagues, an inspector general's report revealed last month.
While the GSA admitted it has a problem with travel, the agency on Thursday denied any wrongdoing with regard to the tax break.
To qualify for the tax benefit, the contractor, engineer or architect who performs the work on the government building must provide the Internal Revenue Service with certification from the government agency, in this case, the GSA.
The GSA told contractors, according to a letter Boustany released, that they could claim the deduction "upon payment to GSA of 19 percent of the deduction amount."
Tax experts say they have never heard of a government agency asking to be compensated in exchange for a tax deduction.
"The most common thing that happens is the government agency signs over the certification to the architect or the engineer without any cost," said Dean Zerbe, a tax attorney and former tax counsel for the Senate Finance Committee. "From time to time, a government agency might say they would like to see a reduction in the cost of the building."