Kennedy, Braun introduce legislation to prohibit EXIM from financing companies with delinquent tax debt
Feb 25 2021
WASHINGTON – Sens. John Kennedy (R-La.) and Mike Braun (R-Ind.) today introduced legislation that would prohibit the Export-Import Bank (EXIM) from providing loans to individuals and companies that are delinquent on repaying their tax debt.
“American taxpayers shouldn’t be forced to subsidize businesses that haven’t even paid their own taxes, and I’m proud to work with Sen. Braun to bring accountability to the Export-Import Bank,” said Kennedy.
“The Export-Import Bank should not serve as an ATM for tax delinquents and this legislation will address this loophole, while also rooting out potential fraud from dozens of companies,” said Braun.
The EXIM Bank currently requires companies applying for certain financing to self-certify that they do not have delinquent federal debt. The Government Accountability Office (GAO) analyzed federal data and identified billions of dollars in authorized EXIM transactions associated with dozens of companies that may have fraudulently applied for financing.
The GAO found that:
- Federal law states that applicants who are delinquent on federal debts may not receive federal direct loans, loan guarantees or loan insurance until the delinquent debt is satisfactorily resolved.
- Financial pressures potentially incentivize participants or employees to commit fraud on applications to use EXIM.
- Using data from the System for Award Management (SAM), GAO found that, from calendar years 2014 through 2016, EXIM authorized transactions with an aggregate authorization value of about $1.7 billion that were associated with 32 U.S.-based companies that had a delinquent federal debt indicator in SAM in the same month that EXIM authorized these transactions.
EXIM concurred with GAO’s recommendation that the bank should use available data instead of self-certification to prevent companies with delinquent federal debt from obtaining EXIM financing.
As a result of these findings, this legislation would ensure that:
- EXIM could use SAM data and data-analytical approaches to detect applicants and participants with potentially delinquent federal debt and work with the Internal Revenue Service to confirm delinquencies.
- Companies that have fraudulently certified that they do not have federal debt would lose access to EXIM financing, and EXIM would deny applicants holding such federal debt.
- The president could waive the prohibition if the president determines that the work being carried out by an entity with delinquent federal debt significantly affects U.S. interests.
- Debt that is being repaid in a timely manner is not considered to be seriously delinquent federal debt.