The Internal Revenue Service (IRS)'s inspector general stated in a report published on Wednesday that the IRS has been paying money to tax-cheat contractors who have to pay millions of dollars in debt to the federal government. The act is also against federal law.

The tax agency gave contracts to 17 companies of worth $18.8 million from 2012 and 2013 and all of them were with tax debts. However, as per a 2012 law, the contractors should be in no debt to do business with the agency.

It has been said that the agency did not even pay heed to check whether or not contractors have paid their taxes. "The IRS has not established a definition of federal tax debt and currently does not perform proactive tax checks specifically to determine if prospective contractors are in compliance with federal appropriation law", said the inspector general investigators.

In response, the IRS said that the stated contracts represent just a small fraction of more than 20,000 contracts that the agency awarded in 2012 and 2013. The agency also said that since then, nine of the contractors have paid their back taxes or have enrolled in payment plan.

But the inspector general seems to be in no mood to consider it as a reason and affirmed that the modified contracts should be considered as new contracts and should have never been granted. The report did not name the contractors. The IRS can check whether contractors owe back taxes or not, but it did not keep a tab of it.